| The 2% rule is a powerful tool in Forex trading. By | | | | 25%. |
| adopting this rule you're using a strategy that | | | | The percentage that you decide upon will depend on |
| decreases the size of your losses during losing | | | | the type of system you're trading, the size of your |
| streaks, an important consideration. There is, | | | | float, and your personal tolerance for risk. Generally, |
| however one small caveat that you need to be | | | | smaller Forex trading floats might use 25%, and |
| aware of when using the 2% rule to calculate how | | | | larger Forex trading floats might use as little as 10% |
| many Forex shares you are going to buy. As you | | | | or even 5%. There are no definitive numbers, and |
| know, the number of shares you can purchase is | | | | the percentage that you choose will depend on your |
| determined by your maximum loss and the size of | | | | personal circumstances. |
| your stop. This means that by increasing your risk, | | | | Once this tendency is corrected for you will have all |
| you can also increase the dollar value of the position | | | | your money management rules in place, ready to |
| you open. By simply shrinking your stop size, that is | | | | control your risk in the Forex market. Now you need |
| by setting a tighter stop loss, you can increase the | | | | to take the next step. Test your system to find out |
| dollar value of the position you open. | | | | which of the variables best suit you, remembering |
| To avoid a situation where you could end up with | | | | always that position sizing is the most significant part |
| excessively large positions that may put your Forex | | | | of any system design. It is the lynchpin of money |
| trading float at risk, you can choose to introduce an | | | | management. Once you've tested your system, and |
| extra rule. This rule would limit the dollar value of a | | | | fine-tuned your rules, you will be well on your way to |
| position to be no more than a set percentage of | | | | becoming a successful Forex trader. |
| your entire Forex trading float. | | | | -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=- |
| For example, you might decide that you'll never open | | | | David Jenyns is recognized as the leading expert |
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| of your entire Forex trading float. This rule would | | | | systems. |
| only be executed if, after calculating the formula that | | | | Discover the "secret formula" of trading that anyone |
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