The 2% Rule in Trading – A Key Risk Management Strategy

The 2% rule is a crucial risk management principle in trading, helping investors protect their capital. According to this rule, each trade should not risk more than 2% of the total capital. For example, with a $10,000 balance, the maximum risk per trade should be $200. This strategy helps prevent account wipeouts, maintain psychological stability, and optimize long-term profitability. Many professional traders use the 2% rule to manage risks effectively and trade more sustainably.