Question 15—The 6% Rule

Answer 2 It will protect your account from a drawdown caused by a series of bad trades.
The 2% Rule is designed to limit risk on any single trade, but the 6% Rule will protect you from the damage caused by a series of bad trades. The 6% Rule will force you to step back when losses begin to mount; this is the opposite of what most traders do, as they dig themselves a deeper hole by frantic trading. The time to apply the 6% Rule is before you enter a trade, not after. It helps you to see whether you can afford the risk of an additional trade.

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