One Financial

Many experienced traders would consider it prudent to only have between 20 and 40 percent of their margin tied up in the market at any one time Obviously, this is an elastic figure and ultimately depends on how comfortable they feel with the entry and exit strategy that they have in place.  One of the most common misinterpretations of managing risk that we come across, both by novice and experienced traders, is to minimize risk by setting tighter stops. Stops should be set as a function of market action.  If the losses taken on these stops are unacceptable, the number of contracts traded could be reduced rather than merely tightening the stop.