The 2% rule is a powerful tool to operate with foreign currency. By adopting this rule you are using a strategy that decreases the size of their losses during losing streaks. Many make the mistake of using stop loss to control the risk. That is completely wrong. The stops are used to avoid greater losses, while the risk is controlled by the size of the positions. What you should do is determine the point farthest from our entrance where our prediction would be for failed, here place the stop loss and then calculate the size of the operation so that, in case of reaching this stop-loss, the losses are not more than 2% of our capital.
To avoid a situation that could end up with excessively large positions that can jeopardize your Forex trading, you can choose to insert a rule extra. This rule limits the value of the position in dollars, which is nothing more than a certain percentage of flotation.
You could decide that you never opened a position that has a value in dollars of more than 25% of its floating rate.
This rule is run only if after calculating the formula that determines how many shares to buy, you find the value of that position of more than 25% of its fleet. If this happened, it should proportionally reduce the size of its position to ensure that it did not exceed 25%.
The percentage depends on the type of system that you used to operate, the size of your fleet and your personal risk tolerance. In general, smaller fleets can use 25%, and large can use as little as 10% or even 5%. There are no definitive numbers, and the percentage you choose will depend on your personal circumstances.
Once you correct this trend
You will have all the rules of money management in place, ready to control the risk in the Forex market. Now you need to take the next step. Put to the test its system to choose what best suits you, remembering that the position size is the most important part of any system design. It is the cornerstone of the management of the money. Once you have tested the system and refined its rules, you will be well on your way of becoming a successful Forex trader.