Credit Card Debt Guide

The core principle of effective trading money management is for us to define both our trading float, as well as our maximum trading loss. By capping the amount we’re willing to loose on any one trade, we’re safeguarding ourselves by ensuring any losses we encounter will be minimal. Essentially, the amount we allocate for trading losses should only be a small percentage of our trading float as this acts as a buffer in the event that we suffer from a series of simultaneous losses.

Don’t make the same mistake that so many traders make by risking too much in trading entry. Instead, you should aim to keep losses at an absolute minimum, keeping in mind though that you also need enough freedom of movement in order to benefit from profits.

You’ve more than likely heard of Steve Waugh, a former cricket captain for the Australian team? Well, he once stated that protecting your wickets and staying in the game was of far greater importance than simply making runs. In trading, your trading float is your wickets and if you loose it, you’re out of the game.

Always being aware of the maximum loss I’m willing to accept, doesn’t mean I’m negative. Instead, because I employ a meaningful trading psychology, I’ve learnt to be on the defensive at all times. After all, it’s all about survival.

Being a firm believer in keeping trading losses to a minimum, a top trader by the name of Ed Seykota once defined the 3 elements of trading. He said,”Follow these three rules and you just have a chance”,

Share This