HOW TO USE  CAPITAL FOR TRADING

Before you do any trading, you must know the amount of capital required to make a success trading and the exact amount that you must risk on any one trade in order to always have capital left to trade with.

You can begin trading in 10 shares, 100 shares, 1000 shares or any other amount, but the main point is to divide your capital properly and to distribute the risks equally to protect your capital.

Whatever amount of capital you use to trade with, follow this rule: Divide your capital into 10 equal parts and never risk more than 10% of your capital on any one trade. Should you lose three consecutive times, then reduce your trading unit and only risk 10% of your remaining capital. If you follow this rule, your success is sure.

In this way, you will be able to make 10 trades on your capital and the market would have to beat you 10 consecutive times to wipe out your capital, which it will not do.

You should try to make trades a price where it will only be necessary to use 1% or 2 %   stop loss orders, which will cut down the risk.

ALWAYS FOLLOW RULES: Decide this important point before you start trading. If you do not intend to follow the rules strictly, do not begin trading. Never allow guesswork or the human element to enter into your trading. Stick to the “Capital” rule, and under no condition risk more than one-tenth of your capital on any one trade.

Follow the mathematical rules and you will make a success