What is the ‘2% risk rule’?
The “2% risk rule” is a guideline used by many traders and investors to manage their risk. The rule states that a trader or investor should not allocate more than 2% of their total capital to a single trade or investment position. The 2% risk rule is based on the idea that diversification is an […]
How important is risk management?
Risk management is a critical component of successful trading and investing. By effectively managing risk, traders and investors can protect their portfolio against potential losses and can help to ensure that their investments are consistent with their overall investment objectives. There are several reasons why risk management is so important. One reason is that the […]
What is hedging?
Hedging is a risk management strategy used in trading and investing to reduce the potential impact of adverse price movements on an investment. This can involve taking offsetting positions in different assets, or using financial instruments such as options or futures contracts, in order to protect against potential losses. Hedging is an important concept in […]