Today, let’s talk about a rule that’s been repeated to death but that 99% of people can’t follow: the maximum loss on any single trade
should be no more than 2% of your total capital.
【Let’s do the math】With 10,000 U in starting capital, 2% means losing no more than 200 U on a single trade. After 10 consecutive losses, you’d still have 8,000,
A 20% drawdown can be recovered with just a few winning trades. By contrast, if you go all-in each time and lose 30%,
three losses in a row leave you with just 34% of your capital. You’d need to nearly triple it to break even—mathematically, you’re pretty much done for.
【How to put it into practice】It’s not “keep your position size below 2%.” It’s “make sure the amount you lose if this trade hits its stop-loss
is no more than 2%.” So the right order is: find your stop-loss level → calculate the stop distance → work backward to determine your position size.
Use a smaller position for trades with a wider stop loss; you can increase the position size somewhat when the stop loss is tighter.
【Why is it hard?】Because making 2% feels too slow, and human nature craves more excitement. But the market has never weeded out people who earn slowly—
it weeds out people who lose quickly. First, learn to avoid blowing up your account; then think about doubling your money.
What do you think? Share your experience in the comments.