Trading Psychology 13 September 2022

Controlling Risk

Let’s take a look at how controlling risk with the 2% Rule works vs. an even tighter 1% Rule. Table 3 shows what your account would look like after a five-in-a-row losing streak—something an active trader could experience in a single day. Note how the fixed percentage rule reduces the size of each succeeding trade, which slows your account’s decay when you experience a losing streak.