But shouldn't we differentiate between hedge funds and our retail FX brokers?
Good question, don't you think?
Good question. Not exactly. Limiting exposure to a 2% Max is the first rule. In hedge funds, this is more complex in that cumulative exposure is calculated from hundreds of trades,( both winning and loosing positions), and this is never done manually.
retail traders on the other hand are less likely to have more than 10 trades open,while sticking to the 2% rule. This is attributed to manual trade management, and low trading capital leading to traders overlooking the importance of the 2% rule.
I would be more careful if I can loose $200K in a day than I would if all I can loose is $100.
Bottom line 2% max is not negotiable, everything else is relative.
Giovan