Minimizing Your Trading Losses

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Determine the maximum amount of capital you are prepared to lose in one trade.

Like the professional poker player I met, you might set your limit at 2%. In Market Wizard Larry Hite recommends not going beyond 1%. Other professional traders say 0.25%. You need to find the sweet spot to match your trading float this is the key to reducing your trading losses.

Set a predefined point at which you admit defeat and exit the trade. When you enter a position, you never know where you are in the trend. The trend might be in the middle of its run or at its end. Thats why you must set your initial stop.

Its like saying, If a particular trade doesnt do what I thought it would, Im going to get out. Generally, short-term traders will set their stops closer to the price, while longer term traders tend to give their trades a little more room to move.

If youd like to learn more about reducing your trading losses visit:
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