Thanks, John, great reading... I absolutely and fully agree, the risk must be determined and uniform across all trades, a 2% risk is all any trade is worth... apparently this idea is well respected among the great ones... when you get on a bus, you ought to know when to get off that bus even before you get on...
Another thing which I didn't see mentioned it to equalize the risk across all trade positions, this means commit the same amount to each and every trade, do not overload any one trade... so, if for example you would commit $2,000.00 (small, but for example) to any one trade, then if each share costs $100.00, then you can only buy 20 shares, if each share costs $10.00, then you could buy 200 shares... this way the 2% risk is also uniform across all trades... putting more into any one trade is picking favorites and when trading there should not be any favorites... and so on, there are a number of rules to follow, but these are just a few...
GZ |
