How Money Management Protects You

How exactly does the 2&2 Money Management plan protect you? Let’s look at a table that shows us how many losing trades we would need to get in a row to lose all of our money at 2% risk per trade:

Number of losing tradesAccount Balance
0$1,000.00
1$980.00
2$960.40
3$941.19
4$922.37
5$903.92
6$885.84
7$868.13
8$850.76
9$833.75
10$817.07
11$800.73
12$784.72
13$769.02
14$753.64
15$738.57
16$723.80
17$709.32
18$695.14
19$681.23
20$667.61

Look at that! 20 losing trades in a row and we still haven’t even lost half our money. Of course the 35% we did lose is devastating, but I’ve never lost 20 trades in a row, and I doubt you will either. My record is 7 losses in a row, and that’s only happened once in all the years I’ve been trading.

If you follow proper money management techniques you’d have to be an absolute idiot to lose anywhere near all your money. After I lost 7 trades in a row I only lost about 15% of my account, which is fine, since I still came out with plenty of profit for that year.

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