Swing Traders

Money management is crucial in every trading strategy. It is also the most neglected part of a trading strategy.

The money on your account is your working capital. Handle with care!

Before entering a trade, one should know what his initial risk is. 

Swing traders do not risk more than 3% of their account per losing trade. The maximum leverage they apply is for example 2.

Example:

• £10,000 on the account
• At leverage 2, the trader can take up positions: 2 x £10,000 = £20,000
• Maximum risk per losing trade: 3% = £300
• A traders buys 500 AstraZeneca at £30.00
• The trader places the stop loss at £28.00
• His maximum loss per trade is £2.00
• The size of his position will be: £300 : £2 = 150 shares
• Value of his position: 150 x £30 = £4,500
• Free buying power: £20,000 - £4,500 = £ 15.500

With this simple approach you will limit your losses before entering a trade. And remember, not every trade will be a losing trade.