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Thursday, 18 June 2015

The 1% Rule

The 1% Rule

Let's Go Straight to the point.

If your Capital is $30 000 and you are applying the 1% rule.

This means the amount of money you are willing to pay and not receive is $300. 

Excluding Buy and Sell:
Brokerage Fee, Clearing Fee, Access Fee and GST(7%) Fee.

Let's be more conservative in an open position in Trading.

The below example excludes the above fee which indicate the amount paid will be more then $300.

By text book theory, any Stop Loss is usually 2 pip below the lowest low.

With that, 1 pip will be $150 since the maximum you are willing to pay is $300.

If Stock A Entry Price is $1.00 and the Stop Loss is $0.98 which is $0.02/pips.

$300/$0.02 = 15 000 shares

In order to keep to the 1% rule of your capital you can only purchase 15 000 shares.

There are other ways of reading the above material to suit your own risk reward.

The important thing is to mange your risk well and mange your money well.

Trade and Invest Safely Everyone.


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