Doing your best to risk no more than 1% of total trading capital per trade, should solve these five problems that traders face:
- If you only risk 1% of trading capital per trade, you will not experience more than a 10% draw down with 10 consecutive losses. If your trading system is robust, you are unlikely to lose more than 10 times in a row.
- Your stress level will be manageable if each trade is just one of the next 100, with 1% of capital at risk.
- Your ego will be manageable if a loss is just 1% of your capital. It will turn decrease your desire to be right at all costs.
- You will be more likely to remain emotionless about your trades, when trades are 1% of trading capital with the correct position sizing and stop loss.
- With only 1% of trading capital at risk, you will become a better time manager because you will not need to watch ever tick of your position.