Step 1: Determine the trading frequency

This is an important factor affecting effective capital management or not. If there is a trading system, then perhaps you will quite accurately estimate how much your trading frequency is in a day/week/month. However, if any brothers do not understand their own trading rate, please pay attention to this number from now on.


Because of the risk, we will evenly distribute to each order, the trading frequency will help you to allocate capital more accurately.

Step 2: Determine the amount to accept the risk

This is an important number that affects the volume of you entering the market. Note that the amount you accept the risk needs to be determined for both your account and for each trade order, based on the frequency of your trade.

For example, your trade frequency is 3 orders a week, so 1 month will be about 14 orders. You accept to lose 14% of your account for 1 month of trading. So each order is 1% risky.

Step 3: Determine your stop loss

The stop loss combined with the risk appetite of an order will help you figure out the volume of your trade to be executed. So in the worst-case scenario, you will bear the exact amount of risk that you have estimated before.


Step 4: Determine the volume of the trading

As mentioned in step 3, the trading volume will be determined based on the amount of loss and risk you accept. But the traders note that, please check the volume of the transaction before executing, make sure we have calculated correctly. And understand that, this is the trading volume that guarantees us losses within the allowed limit. And do not be dominated by psychology when everything still goes according to what you set out.