The 2% stop loss
Never risk more than 2% per trade. This is the most common - and yet also the most violated - rule in trading and goes a long way toward explaining why most traders lose money. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. This is the primary reason why the 2% stop-loss rule can never be violated. No matter how certain the trader may be about a particular outcome, the market, as the well known economist John Maynard Keynes, said, "can stay irrational far longer that you can remain solvent.
We learned the importance of risk management but we failed to apply it on our actual trading so the really problem is we failed to master our emotions in trading.
2% SL and 2% risk are two different things.
If you open a trade with ur full capital then 2% risk = 2% SL. But if this is not the case then SL can be any percentage and even 100%. It all depends on ur trade amount percentage.
Stick to your rules
Hi there, just thought i'd mention there is an ongoing thread talking about the 2% rule already and it looks like it will also cover other risk managment techniques as well.. http://bit.ly/HX2Zoo