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THE NEW TRADING OF A LIVING- RISK MANAGEMENT

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THE NEW TRADING OF A LIVING RISK MANAGEMENT The 2% Rule in the Futures Markets A trader recently asked me how he could apply the Iron Triangle of risk control to  trading e-mini futures in his $50,000 account. I replied: A. If you are trading a $50k account, the 2% Rule would limit your risk on any  trade to $1,000. Let’s say you want to be conservative and risk only 1% of that  account, or $500. That will be the first side of “the Iron Triangle of risk Control.” B. Suppose you look at your favorite e-minis and want to sell a contract short at  1810, with a profit target at 1790 and a stop at 1816. You’ll be risking 6 points,  and since one point in e-minis is worth $50, your total risk will be $300 . That will be the second side of your Iron  Triangle of risk control. C. Close the triangle by dividing “a” by “b” to find the maximum size you may trade.  If your maximum risk is $500, then one contract, but if $1,000, then three. Please meet two futures