The 2% rule with spread trading


Many dealers who enter the current market, destroy their portfolios within a short time period.

They are simply unaware to this trading risks and truths.

Should they merely knew some essential money MT4 explained management rules, then they would steer clear of this scenario and keep their portfolio afloat.

2% Rule to Check out Every Spread Trade
My principle is very easy.

With almost any medium probability trade, I will never risk more than 2 percent of my portfolio per position.

With almost any trading plan, there’ll be times when you go through a month or two of downside.

In this particular environment, it’s normal to survive to eight losing transactions in a row.

If you risk 10% of your own portfolio per trade, excluding compounding, you are going to discount 80 percent of one’s portfolio.

Not only will your portfolio be nearly float, you will also possess a pang of feelings of uncertainty, frustration and you will feel like trading is just another scam.

Successful trading can be a diuretic sport and that’s why I adopted the 2 percent rule to prevent this situation.

Rather than being down 80%, I’ll simply be down 16 percent of my portfolio (8 trades x2% risk per transaction ).

Using BlackStone Futures,you’re able to spread trade using the 2% rule and guard your portfolio at exactly the identical moment.

NOTE:If the word Spread Trading is not used to you, click-here to grab before you carry on…

The Way To Spread Trade Together With the Two% Rule
Let us imagine you have a portfolio of R100,000.

With the 2% rule, your maximum risk per transaction is going to be R2,000 (R100,000 X 0.02).

Here are the specifics for your transaction

Chat: Sasol

Portfolio value: R100,000

2 percent Max hazard per commerce: R2,000

Entry cost: 40,000c (R400)

Stop loss cost: 35,000c (R350)

Take profit price: 50,000c (R500)

Today you’ll have to calculate that the Rands risked a 1 penny movement.

Max hazard per trade
Entry cost
Stop loss price
The difference between the Entry price and also the Discontinue loss price is 5,000c (R 50.00). That is the Risk in exchange.

Here’s the calculation for those rands risked per 1 cent movement.

Rands risked per cent = 2 percent Max danger per transaction ÷ Risk in exchange

= R0.40

This usually means every inch penny that the Sasol share price goes, you’re lose or make 40 cents.

On your MetaTrader 4 stage, they utilize the word’Volume’, as an alternative of Rands risked a percentage.

Once you set in your levels with the Volume of R0.40, in case the Sasol trade strikes your stop loss, you’ll lose R2,000 (5,000c X R0.40).

What You’ll Gain At The Spread Trade
In the event the Sasol trade strikes the benefit from 50,000c, then you’re going to wind up banking R4,000 (10,000c X R0.40).

Whether your portfolio reaches at r 1,000, R100,000 and sometimes even R10,000,000, these calculations work the exact same.

From the future article, I’ll send you some special spread-trading Calculator and explain how you can utilize the 2% rule.

“Wisdom yields Wealth”

Timon Rossolimos
Analyst, BlackStone Futures

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