Understand the 2% Rule with IQ Option

Understand the 2% Rule with IQ Option

IQ Option’s latest guide will help users understand the 2% rule.

Considered one of the more basic rules when it comes to risk management, if you hadn’t previously considered it, it might be time to start doing so. While the method is not an exact science, as naturally, each trading situation is different, the fundamental aspect of the 2% rule is that no investment should ever exceed 2% of the total capital that an investor holds.

By doing this, your risk is limited to that amount of your capital – regardless of what happens. In theory, this means it will nearly always be a risk that you can recover from. Naturally, wrong calls can add up and become losing streaks but if all your investments are 2%, it is still likely that you won’t suffer too heavy losses except in drastic situations.

The maths of this are simple enough. Two bad choices with 2% will equally a maximum loss of 4% of your total capital but two bad choices with an investment of 50% of your capital will equal 100%. Better known as going broke. Of course, there is more to it than this, all of which is explained at IQ Option.

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