Never Risk More Than 2% of Your Account At Once

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The tip in the headline is my contribution to a great project by FXStreet in which experts share their tips. For newbies, it is important to have enough breathing space to learn before they burn out their account.

In the article published here, I elaborate on this matter. I am honored to participate in this project. There are wonderful tips from Kathy Lien and from Valeria Bednarik on the same page. More tips will be released everyday.

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About Author

Yohay Elam – Founder, Writer and Editor
I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me.

Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

  • Absolutely agree. But… in the systems with very high accuracy I can imagine risking more than 2% per trade, but it is for longer discussion about the whole system :). Risk management is the key to succesfull trading.

  • lee

    2% tends to be the general consensus however i wanted your opinion on scaling up, for instance starting your initial risk at 0.2% for a trade with an Reward:Risk of at least 2:1 and in the event of a loss increasing your risk to 0.3% for the next trade, as long as this money management is used in conjunction with a strategy that has a positive expectancy and each trade is taken seperately from the last without emotion or revenge trading it yields some excellent results, what are your opinions on this?

  • If your system works well for a long period of time, you can enlarge position sizes, but very cautiously.
    The bigger size of the account allows you to increase position sizes without compromising the 2% rule, which is very very important in my opinion.
    I hope this answers your question…