Money management

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What is the golden rule of money management in trading?

Invest all your money in a single trade

Risk only a small percentage of your trading capital per trade

Always use maximum leverage

Avoid setting stop-loss orders as it leads to more losses

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What is the recommended risk per trade as a percentage of your trading capital?

50%

25%

1%

As you wish

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What is the main purpose of setting a stop-loss order in money management?

To lock in profits

To increase leverage

To limit potential losses

To maximize returns

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What does the risk-reward ratio indicate in money management?

The number of trades executed

The potential profit compared to the potential loss in a trade

The leverage used in a trade

The diversification level of the portfolio

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What is the role of a trailing stop in money management?

To set the initial stop-loss order

To secure a fixed profit

To adjust the stop-loss level as the trade progresses in a favorable direction

To increase the leverage

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