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Top 5 Risk Management Rules

AMEX:SPY   SPDR S&P 500
Top 5 Risk Management Rules:
1. Only Trade with Risk Capital
-Risk Capital is the amount of money you are willing to lose and do not include your living capital into your trading account!

2. 2% Risk Management
-The 2% Rule prohibits you from risking more than 2% of your account equity on each trade you are entering.

3. 6% Risk Management
-The 6% Rule prohibits you from opening any new trades when your current open risks in your open trades reach 6% of your account equity.

4. 10% Risk Management
-The 10% Rule prohibits you from opening any new trades for the rest of the month when the sum of your losses for the current month and the risks in open trades reach 10% of your account equity.

5. Risk to Reward Ratio
-Only take the trades which provide you at least 1:2 Risk to Reward Ratio

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