One simple trading trick is the "Golden Rule" of Risk Management: Never risk more than 1-2% of your trading capital on a single trade.
Here’s how you can apply it easily:
Calculate Your Position Size:
Decide how much of your trading capital you're willing to risk. For example, if your account size is $10,000 and you decide to risk 1%, that means you’re willing to risk $100 on a single trade.
Determine Stop-Loss:
Set a stop-loss order at a level where your loss is limited to $100 (in this example). If the trade moves against you, you exit the position to limit your loss.
Adjust Your Trade Size:
If your stop-loss is $1 per share, you can buy up to 100 shares. If your stop-loss is $2 per share, you should buy 50 shares.
This trick ensures that you protect your capital and manage risk effectively, which is key to long-term success in trading!
