1.) The 5 Key Position-Trading Rules
1. First Rule: Do not hold the position longer than necessary:
It is important to choose a trading-system which has good entry timing and the right opportunities to exit therefore it is the best to be in the market when
volatility increases and takes profit at the important levels to not hold the position unnecessarily longer.
2. Second Rule: Aim to make as much as possible by risking as little as possible:
When trading we should advance by making the most of what we have at hand, today's markets offer options with leveraged trading which can work also
with smaller percentages of the deposit at hand, in this case, the leverage should be calculated right.
3. Third Rule: Only risk a small amount of capital on any trade executed:
It is commonly under beginner traders to risk a high percentage of the total deposit, this is a fatal mistake as the risk grows exponentially, to achieve security
of the deposit in the long-run, the maximum risk per trade should not be more than 10% from the deposit, best is 0.5-2%.
4. Fourth Rule: Don't come to the situation to meet margin calls:
This means you should avoid being marginally called on any occasions, when this happens there is evidence that the trade was too risky and the stop-loss
better be placed before the margin call, when it happens, it should be a time to review your trading-system.
5. Determine the maximum drawdown for every trade in advance
Before every trade you should measure how your position size with the stop-loss will possibly take a drawdown in the deposit. When the risk is too high
then the smaller position should be preferred, when it is still too risky than a bigger account will be a good option.