Apply Money Management and Risk Control

Your strategy should apply smart money and risk management principles your trading. It is wise to manage risk, growth, and the investment of additional capital. Several ways that you can do this include implementing stops in your strategies, pyramiding, and adjusting the percentage of your net profit that you are risking.

• Stops - Using Stops help you minimize risk and protect your profits. It's up to you to decide how much you are willing to risk per trade and then balance that against what this protection will cost you in terms of performance. There are many types of stops, and how you use them is an individual decision that depends on your trading personality and your willingness to risk your capital.
• Pyramiding - You should also examine the merits of adding shares or contracts to an existing position within a market, known as pyramiding. Pyramiding can dramatically impact the profitability of your strategy. You can specify whether or not your trading strategy can add to existing positions, and if so, under what conditions. For more information on using pyramiding in TradeStation, see About Strategy Properties.
• Net Profit Risk - You can also look at the percentage of your net profit that you're risking and examine if a different percentage would affect your profits. The use of stops in your trading becomes even more important because as you increase your profits, your risk also increases, and to balance out the increased profits, you need to work on the risk side of the equation.
  
  There are many ways to approach money and risk management and doing so should increase the success of your strategy.