Trading Coach Jo’s clients are taught to strictly follow proper Money Management Practices. Here are 2 of the MMPs:
1. Each trade amount must be a maximum of 10% of your account.
2. Each trade must have a maximum stop loss of 20%.
Two simple rules, yet so difficult for some to follow. When those trading emotions flare up, even these two simple rules often get thrown out the window. Traders get so excited thinking about their “sure” trade. I am certain that you have never done this, but you may have a friend….
Take a 3×5 card and write: “Think you know what the market is going to do? NOT” Tape this card to your monitor.
Be aware of the effects that unchecked emotions have on your trading judgment. If you are sooooo sure of a trade, you may find yourself entering this trade using 20-30% of your account. If the trade does go against you, your losses will be great and your trading account will suffer needlessly.
Trust me (ask me how I know), follow these 2 rules and your trading account will stay live so that you can trade another day!