The 2% Rule? (Never Break It)

OANDA:EURUSD   Euro / U.S. Dollar
What Is the 2% Rule?

The 2% rule is an investing strategy where an investor risks no more than 2% of their available capital on any single trade. To implement the 2% rule, the investor first must calculate what 2% of their available trading account is: Example: $5,000.00 account equals $100.00 risk per trade.

Key Takeaways:

The 2% rule is an investing strategy where an investor risks no more than 2% of their available capital on any single trade.
To apply the 2% rule, an investor must first determine their available capital.
Stop-loss orders can be implemented to maintain the 2% rule risk threshold as market conditions change.

How the 2% Rule Works
The 2% rule is a restriction that investors impose on their trading activities in order to stay within specified risk management parameters. For example, an investor who uses the 2% rule and has a $100,000 trading account, risks no more than $2,000–or 2% of the value of the account–on a particular investment.
By knowing what percentage of investment capital may be risked, the investor can work backward to determine the total number of lot size to purchase.
The trader can also use stop-loss orders to limit downside risk.

In the event that market conditions change, an investor may implement a stop order to limit their downside exposure to a loss that only represents 2% of their total trading capital. Even if a trader experiences ten consecutive losses, using this investment strategy, they will only draw their account down by 20%.
The 2% rule can be used in combination with other risk management strategies to help preserve a trader’s capital. For instance, an investor may stop trading for the month if the maximum permissible amount of capital they are willing to risk has been met.


Great advice, thank you!
200 coins
+20 Reply
Aekwiwat TradingView
Be a part of the management of education as well.
+1 Reply
This 2% rule only applies when you use a leveraged account and trader margin accounts. Personally, I never trade with leverage or margin. If you trade spot with your own available funds you can risk a lot more on each trade.
+76 Reply
@patlaka2000, Exactly this, i scalp trade and use my full bag, i only need small moves, like 2% to make a great weeks pay and in Crypto, you get 2% moves several times a day.
+29 Reply
Navima UnknownUnicorn24828545
@UnknownUnicorn24828545, watch out for your ego and that is greed . I dont know how long you are trading ,but beware of risk.
+26 Reply
slowp0ke Navima
@Navima, out of 100people who talk about being a good trader online maybe 3% really will still be in profit 10years later.
+13 Reply
Navima slowp0ke
@slowp0ke, yes , To me strategy is almost (or more) important as the share.
+5 Reply
Zac_Harris UnknownUnicorn24828545
@UnknownUnicorn24828545, who are the best people to learn scalp trading from?
+2 Reply
LTBC Zac_Harris
@Zac_Harris, eager for the answer too! Thanks
@Zac_Harris, honestly scalpers do not earn.