The 1% Rule (Weekly / Day Trading) ļæ¼
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ā¼ļøRisk management is essential for traders, as It helps to manage losses and means we are best placed to remain profitable even when losing some trades.
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šThe 1% rule just means you never risk more than 1% of your capital on any given investment. (There are risk management calculators to calculate your risk for you.)
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āš¼Personally, we would risk 1% to make 5% on any trade as a general rule of thumb. Meaning we apply a risk reward ratio of 1:5 so each win is the equivalent of 5 losses.
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šRisk reward ratio - Is used so investors can see the expected returns of an investment compared with the risk they must take to achieve these returns.
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šTaking partials - Is when we take a portion of profits off a running trade to reduce the level of risk in the remaining trade.
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šBreak even - We would use this to describe when a trade closes with zero profit and zero loss. Therefore the trade has broke even.
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#bullish
#learntoearn
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