Friday May 20, 2022

For commodities, do not risk more than 2 and 5% of your income per trade

Through money-management, the trader provides information on how much money to risk for a given trade so that speculation is as risky as possible and at the same time so that the funds for that trader are valued as efficiently as possible.

Unfortunately, the real knowledge of a number of information and knowledge concerning the application of money management in trading is mostly able to understand and, after sufficient practical acquaintance with other aspects of trading, which are described in more detail in the text. Since every businesswoman is in the first place in this area, she will offer some other practical information about money management.

Money management takes many forms
Now we can think that through money-management the trader will gain information about how much money to risk for a given trade so that speculation is as risky as possible and at the same time so that the funds for that trader are valued as efficiently as possible.

When Larry Williams, one of the most successful and visible commodity traders of the day, repeatedly turned $ 10,000 into $ 1.1 million in one year in an official competition, it wasn’t because there was a mature maturity of a combination of technical indicators or other tools. A significant part of his hurry worked in the application of money-management. Larry Williams risked just enough for one trade so that in the long run it would not be for his liquidator, but at the same time so much that his company could grow aggressively.

Risk to one trade
The business cell is about probabilities. All traders accept with a certain probability of profits and losses trades. Lost stores are clearly an integral part of business.

Every trader, if he wants to succeed in trading, has to risk only enough to be able to grow even the most losing trades. It is very important to always risk only so much that individual lost trades can not liquidate the whole or its substantial st.

The exact value of the risk is bad for a number of factors and cannot be fully recovered. Another risk will be taken by an intraday trader with a high frequency of trading, another long-term speculator who cannot afford to let a single trade run away. The corresponding riskier will, of course, depend on the characteristics of the trading system, the experience of the trader, the traded markets, etc.

In general, you pay certain basic rules of money management, which we should never break. In particular, a trader should not risk more than 2 and about 5% of a single trade for a single trade. The borders are not exactly accurate, but e.g. in the intraday business, we recommend risking a maximum of 23% here.

So if we take nap. with that 6,000 USD, so the maximum risk can be, when applying the 3% rule, a maximum of 180 USD including the commission. If we risk $ 500 for a single trade with $ 6,000, then we are preparing for financial suicide, we say, in such a case, we would only be here after 6 losses for half of ours! If we risk only 3% here, after 6 strtch nm there will still be almost 5,000 USD left, and that is a big difference.

A kind of basic rule of money-management is: Never have more than 50% blocked in margins here. This is especially important in the context of a small shop, where the businessman must be able to financially, for example. open the gap.

Unless we have a specific reason, we consider both rules to be inviolable when studying commodity speculation. Later, and we begin to study in detail the various approaches to money-management, we can assume that it will suit other set values, but let’s see for ourselves that we know this situation safely.

It doesn’t matter what, but how much
Especially when trading with the help of technical analysis, it is not important how markets we trade, but how many contracts we trade and how we trade our finances.

It is a matter of course that in the phase of getting acquainted with the markets and the first trading experiences, it will be possible for a trader to trade only with a single contract, but the truth is that we will never get rich with such an approach.

In order to be able to find real wealth in the commodity trading trade, it will be absolutely necessary in the future to trade with so-called multi-contracts, or with more than one contract.

ryvek is from the book
“Trading on commodity markets”
vydan nakladatelstvm
City Publishing,
For more information, visit

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