Interesting comments with which I empathise. The 2% rule is okay if you have a large amount of capital – in which case your 2% would probably be much less. The problem arises for the average starter trader who I suspect has considerably less capital. In this situation the only way to trade your way to substantially increased capital within a reasonable timescale, is to risk considerably more than 2%. So what should you do? My suggestion (and what I am currently doing as an experiment over and above my risk-conventional trading) is to find a trading methodology which has a high probability of success and use that in conjunction with stakes higher than the 2% rule.

I tried this in paper format over about 6 months to ensure the viability of the methodology and have just completed the 1st 5 weeks of trading for real. With 11 wins and 2 losers this has been considerably more successful than I expected with approximately 40% gain. Now of course, we are on a good trending upmarket on the S&P 500 and my situation may well be just a lucky snapshot, but I do believe nevertheless that because my basic methodology is simple (just find a good uptrending stock that appears to be stuck in an upwards rut and jump on board, and get out when you've got some profit) there may be some merit. Before I started I would have been pleased to make 10% per month which with compounding could soon turn your capital in to a respectable amount. E.G. you could turn ?1500 into almost 5000 in a year if you can make 10% per month.

Anyway, those are my thoughts and they reinforce my contention that a simple, basic and sound system is probably more important than all the fancy brain- hurting equations and systems that are sometimes purported to be the only way to profitability.

PS. I should add that one of the significant advantages of trading a small capital amount is that you can't actually lose very much (Guaranteed stops are very useful, and if as is sensible, you are only using money that you can afford to lose) there is little psychological pressure. E.G. Trading an SB of 0.24 points on the SP 500 might typically give you a loss of ?20-?30 at some stage of the trade; if you are trading higher stakes would you be psychologically able to handle a temporary loss of say ?400 without bottling out? Once the psychological pressures start building, things can change considerably.