Surviving the Credit Crisis Meltdown

The current credit crisis has caught almost every trader by surprise.

When a "Black Swan" event like this hits, it is too late to devise a plan. The markets move much too fast and will unrepentantly take you down with them.

Our worst case scenario needs to already be implemented in our trading strategies… prior to trading.

Successful futures traders know the importance of strict money management rules. It is the core of their crisis planning. Remember, in trading the first rule is to not lose the money we already have… to achieve this we must play defense.

But playing defense is boring, and so amateur traders often ignore it. But be warned it is ignored only at their peril. And a crisis, like the one we are currently suffering from, truly brings that point home.

The first step in our crisis planning is to limit our total exposure to the markets. This means how much of our stake are we willing to have at risk. Successful futures traders rarely have more than 25% of their equity at risk at any one time. Meaning if you are trading with a $100,000 account you will not have more than $25,000 of it at risk.

This protects us from those “Black Swan” events.

To learn more about how to use advanced risk and money management tactics visit the Money Management page of our website.