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.