The 2% trading rule can prevent you from portfolio failure!
Even with the best trading strategy, you can eventually wipe out your trading portfolio if you don’t consider the risks.
Many traders come into the market and just annihilate their trading portfolios within a few weeks.
They don’t understand the risks when it comes to trading and so, they’ll risk over 10% of their portfolio per trade.
And that’s because they have no idea about my 2% rule.
You see, if you risk 10% per trade in any unpredictable market, you’re bound to fail as a trader!
Let me explain this better with a table!
This table shows you why you should never risk more than 10% of your portfolio ever again!
First you need to understand my 2% rule, before we carry on!
In a winning trading strategy with a 60% win rate, you shouldn’t risk more than 2% of your portfolio in any one trade.
(If you don’t have a winning trading strategy yet, click here now!)
Taking one or two losing trades is ok, but the problem is when you enter into a losing trading streak.
This is where you can find yourself taking up to ten losing trades in a row!
If you’ve been trading for a while, you’ll know exactly what I’m talking about.
This is where you take loss after loss after loss, until you find yourself losing all of your hard earned money.
This can be very demoralising and discouraging for you as a trader, but what if I told you, it doesn’t have to be that way.
To explain this better first, let’s look at the table above so you can see what happens when you risk 10% of your portfolio per trade.
In this example, say you have a portfolio value of R100,000. After you take your first loss you’ll lose R10,000 (R100,000 X10%), which leaves your portfolio value at R90,000.
Then later if you take another loss and risk 10% of your portfolio per trade, you’ll be down another R9,000. This will bring your portfolio down to R81,000 (R90,000 – (R90,000 X 10%)).
I think you see where I’m going with this…
If the losing streak continues and you end up taking up to 10 losing trades, you’ll be down a frightening (R65,132.16) 65.13% of your
That’s R65,132.16 gone (snap fingers), just like that!
Follow my 2% rule and your trading will be stressfree and much more successful!
Now, let’s say you have the same portfolio value of R100,000 but you decide to listen to me and risk only 2% of your portfolio per trade.
You get into your trade, take a loss and you find that you’re only down R2,000 (R100,000 X 2%) of your portfolio.
So your portfolio is now sitting at R98,000.
Second trade, you take a R1,960 knock leaving your portfolio at R96,040.
Third trade, you’re down R1,920.80 where your portfolio comfortably sits at R94,119.20.
If you go through an unfortunate losing streak of 10 trades, you’ll find that you’ll only be down 18.29% of your original portfolio value!
That means of the R100,000 that you had, you’ll only be down R18,292.72 after taking 10 losing trades!
I’m sure you see now why trading the 2% rule and losing only 18.29% of your portfolio is a lot easier to handle than losing 65.13% and risking up to 10% of your portfolio per trade.
You’ll also find that when you trade the 2% rule, trading will be a more stress-free and an easier way to make your second income!
Because of brokerage costs, you need to have a trading account of at least R30,000 to implement the 2% rule even more successfully!
Always remember, “Wisdom Yields Wealth”
: I showed you in just a few minutes how to never blow your trading account, now I want to show you how to cut your losing trades by half! Click here and find out how!