Professional Documents
Culture Documents
Money Managment Lesson Clarification
Money Managment Lesson Clarification
It seems like my tweet on money management wasn't clear enough. I will answer the
most common doubt.
The 3% rule, which is more of an opinion, applies to the WHOLE of the capital
allocated for trading.
Eg. If my trading capital is $1000, I will not let any trade make a loss of more
than 3% of $1000, which is $30.
I can allocate more than 3% of my money for any trade, depending on the expected
profitability.
Eg. On the long trade entered yesterday, I had used 10% if my capital because I was
expecting it to be a 500+ points move.
Conclusion.
The loss on any trade should not be more than 3% of the TOTAL capital.
You can allocate any amount for a Trade, depending on the profitability, though I
would advice not to go higher than 15%.