If I stuck to this one rule the day I started trading I would have...
โข Saved $1,000's of dollars in losses.
โข Sped up my learning process.
โข Avoided every major account drawdown I've had.
If you're new to trading, make sure you stick to this ๐๐ผ
The 1% Rule ๐งต
The 1% Rule states that you should risk, at most, 1% of your total account on every individual trade.
This 1% risk is a function of two flexible components:
โข Your Position Size: % of your account in the trade
โข Your Trade Risk: % between your entry price and your stop loss
Want to take a larger position size? Make your stop tighter.
Trading a volatile stock? Size down on the trade.
The most important aspect of trading is risk management.
It's great to make money, but worthless if you don't have a system to keep it.
Over 50% of my trades are losses, but I'm still profitable because of the 1% Rule.
Keep losses small & let winners run!
"Nick, 1% risk isn't enough, my account is small."
New traders are EXACTLY who benefits the most!
By limiting each trade's potential losses to 1% it will take you:
โข 29 straight losses to fall 25%
โข 69 straight losses to fall 50%
It's tough to be that consistently bad ๐