LESSON 5: MONEY MANAGEMENT
Objectives: If you take this lesson to the end, you will know: 1. How to determine your Risk. 2. How to determine your TP and SL levels. 3. How to carry out Back-Testing. 4. How to determine the success rate of indicators. Money management Money management refers to the set of principles and rules followed in order to protect your trading capital. It helps in the process of deciding your risk per trade. Implementing these rules protects your account from large losses. Risk Risk is the percentage of your account you can lose comfortably, if you must lose a trade. Advisably, only 2% of your account should be your risk. That is, only 2% of your account on all trades. If you decide to take only one trade, the 2% should go on it. However, for two positions, go 1% on each position, and for four positions, go 0.5% on each position. EXAMPLE For a $500 account, Risk = 2% of 500 ...