D.R. Cox and H.D. Miller published a simple formula to calculate risk of ruin for insurance companies. Traders can use this formula to calculate the probability of losing any given fraction of their account.
When considering best trading practices, it’s easy to discard the idea as too general and simplistic, or to default to the industry’s well-worn cliches. However, for both new and experienced traders, there are several rules that constitute a sound approach to trading.