📉🛡️ Two years ago, I stared at a $5,400 hole in my account. Believe me, that kind of pain teaches you things. One of the biggest lessons? Position sizing. The golden rule of professional trading is brutally simple: never risk more than 1% of your total trading account on any single trade, ever.
Let's say you have a $1,000 account. With the 1% rule, your maximum loss on any trade is just $10. Not $100, not $500 – just $10. Think about that. How many $10 losing trades does it take to blow a $1,000 account? One hundred! Now, imagine you're just guessing, risking 5% per trade. That's $50 per trade. You're out after only 20 consecutive losses.
A streak of 20 bad trades can happen to anyone. A streak of 100? Much less likely. This isn't about being right every time; it's about staying in the...
Let's say you have a $1,000 account. With the 1% rule, your maximum loss on any trade is just $10. Not $100, not $500 – just $10. Think about that. How many $10 losing trades does it take to blow a $1,000 account? One hundred! Now, imagine you're just guessing, risking 5% per trade. That's $50 per trade. You're out after only 20 consecutive losses.
A streak of 20 bad trades can happen to anyone. A streak of 100? Much less likely. This isn't about being right every time; it's about staying in the...