Day Trading With Maximum 1% to 2% Of Your Account Size
We have all heard of the day trading risk rule where we do not want to trade with more than 2% of our account size. That means that a 10,000 dollar day trading account can make individual trades of up to 100$ risk per trade.
Why is this day trading rule so prevalent among successful traders?
The one simple reason this strategy works for day traders is that we will all have losing trades and losing streaks. There will always be times, even if we do everything right, where we have multiple losing trades. Therefore this trading strategy works two fold.
- It prevents your account from being drawn down too quickly on successive losing trades
- Only losing 1% to 2% of your account size on a trade is less mentally taxing.
- It standardizes your trade sizes allowing you to improve on trade entry alone.
Bruce Banks