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Live to trade another day is perhaps the most useful piece of investment advice you could receive. Regardless of whether you are right or wrong in your trade analysis, if you live to trade another day then you know that you will always have another chance to make more money. The subsequent two rules will show you exactly what you must do to survive every day in the Futures market. But, as long as you understand and believe this first rule, you will already have an advantage over most investors.

The single factor that causes most investors to over-extend themselves and damage their accounts is greed. When investors get greedy they take unnecessary risks. They also spend countless hours trying to find the one technical indicator or the one economic announcement that is the 'Holy Grail' of investing. They believe that, if they only follow what that one indicator says or what that one economic announcement points to, then they will never have to worry about being unprofitable in their trading again because they will always be right. You will also hear this referred to as the 'secret' of investing.

Unfortunately all of that searching and hoping is unproductive simply because there is no secret. Certainly there may be technical indicators that provide outstanding returns during given periods in market history, but markets change and soon enough other technical indicators will come into vogue. Traders might find an economic announcement to which the market has been paying particularly close attention for the past few months and believe that they have found the key to their investing success. But, once again, the market will change and they will be left looking for a new key to success. To help you avoid the frustration that always comes from chasing your tail we are going to show you how to live to trade another day. That way, no matter what changes take place in the market, you can be successful.

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Know what you are willing to risk before you ever enter a trade. This rule is the basic tenet of living to trade another day. If you don't risk too much of your account in any trade today then you know you will have enough in your account tomorrow - even if you lose money on your trades today - to place another trade. In other words it is not sound investing practice to put all of your money into any one or two trades. Because you never know what is going to happen in the market you should never want to risk everything you have on one position.

The first thing you have to do is determine what percentage of your account you are willing to lose in any one trade. Once you have decided that the rest is a simple mathematical formula. Most investors feel comfortable risking approximately 2 per cent of their total account balance in any one trade. Whilst this is a general rule of thumb, you will need to determine how aggressive or conservative you want to be in your individual account. If you want to be more aggressive then you would risk a larger percentage of your account in any one trade. If you want to be more conservative then you would risk a smaller percentage of your account in any one trade. It is up to you to determine how much you are willing to risk, but it makes sense to avoid going to either extreme. If you want to be more aggressive then consider risking 2 to 5 per cent in any one trade. If you want to be more conservative then consider risking 1 to 2 per cent in any one trade. If you risk too much then you probably won't be around to trade another day much longer. If you risk too little then you probably won't make very much money from investments.

Once you have determined the percentage of your account which you feel comfortable risking all you have to do is plug that number into the following equation:

Here is an example of how this would work. Imagine that you have an account balance of £50,000 and that you would like to risk 2 per cent of your account in any one trade. If you plug these numbers into the equation you will see you should not risk more than £1,000 in any one trade.

One point to remember is that this is the maximum amount you want to risk in any one trade. You may have more than this at risk in your overall account if you are in more than one trade. If you were in three trades at once, for example, you would want to risk only £1,000 per trade but this may add up to a total amount at risk of £3,000. Once you have determined how much you are willing to risk then you are ready to determine your trade size.

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Know how to determine trade size to prevent unnecessary exposure to risk. Trade size is the number of Futures contracts you buy or sell in any one trade. Once you know how much you are willing to risk then you need to know how to set up your trades so that you don't end up risking more than that with which you are comfortable. It doesn't do you any good to know your risk tolerance but then enter a trade that exposes too much of your account to risk.

To determine your trade size you must first decide where you are going to set your stop-loss (which you will learn about next). Once you have determined where to place your stop-loss you will have to figure out how many ticks lie between the point where you are going to enter the trade and the point you have determined to use as your stop-loss. Now all you have to do is plug that amount into another simple equation - one that builds on the equation you have just used to determine the amount you want to have at risk in any one trade.

Knowing exactly how to size your trade will help you to eliminate one of your worst enemies as a trader: fear. Traders who do not appropriately size their trades are constantly worried that they may lose more of their account than they are comfortable with losing. If you can eliminate fear from your trading then you will make much better trading decisions.

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A stop-loss order is an order that you place with your broker which instructs your broker to exit your trade if the Futures contract reaches a specified price. Stop-loss orders allow you to protect your trading account even when you are not in front of your computer - something which is essential since it is physically impossible for you to watch your trades 24 hours per day.

If you buy a Futures contract then you will place a stop-loss order somewhere below the current price to protect you in the event that the Futures contract turns around and starts moving lower. If you sell a Futures contract then you will place a stop-loss order somewhere above the current price to protect you in the event that the Futures contract turns around and starts moving higher.

Here's how it works. Imagine you buy a gold Futures contract at $850. You notice that there is strong support approximately $25 below this price level at $825, and you conclude that if gold breaks below this level it will most likely continue to move lower. Since you bought the Futures contract, and you will be losing money if it moves lower, you decide you do not want to hold onto the trade if gold breaks below $825. To protect your account you set a stop-loss order with your broker at $825 and that tells your broker to exit the trade if gold touches the $825 price level. Whether it is in the middle of the night or it is the middle of the day, if the price of gold drops to $825 then your dealer will automatically exit your trade for you.

Stop-loss orders provide safety and security when you are trading, and they place a critical role in all of your money-management decisions. You should never place a trade without one.