Managing risk

Having a winning strategy is only part of a trader’s success — managing your money and controlling risk are even more essential when you trade. Your goal is to master the markets, but mastering risk comes first.

Risk-management know-how
Whether you trade stocks, FX or commodities, identifying your risks is job number one. Before taking any new trade, it’s crucial to know where you will exit (where you will put your stop) and how much equity is in your account. The difference between your entry price and stop-loss level tells you how much capital you can risk per trade. You can learn more in this explainer video by CME Group.

Meet the 2% rule
Protecting your capital means having rules and sticking to them. One of the most popular methods of managing risk is the 2% rule, which means never putting more than 2% of your equity at risk. If you trade with $50,000 for example, using a 2% stop loss means you could risk up to $1,000 on any given trade. Although the 2% rule is popular, you can choose any level that’s comfortable for you. In this video, CME Group explains how.

Tighten your control
By using an even tighter 1% rule, you can preserve your capital more effectively and slow your account’s decay when you experience a losing streak. Whether you use 2% or 1% for risk management is up to you – what’s important is understanding your risk tolerance and having a plan to keep your losses under control. Let CME Group explain more in this video.

One-stop account protection

Controlling risk is even simpler with Account Shield, our powerful risk-management tool that protects your entire account in one go. Choose a level and, if triggered, Account Shield does the work for you, closing all your positions at the best available market rates, automatically.

Explore more tools