There is really nothing more important than preserving your trading capital. You need to implement a money management system that will, keep you in the game when great trading opportunities come along, and also defines the risk tolerance level that fits your personality. No two traders are exactly the same.
A good example of solid money management is to define your maximum loss, before you take a position in the market. Let us say, you bought one corn futures contract. Every one cent move is worth $50.00. If corn is at $4.25 per bushel, and after analysis, you want your maximum possible loss at $400.00, you would put in a sell stop order at the $4.17 price. That is 8 cents times $50.00, which is $400.00. Please note it is important to place your stop in a strategic location to give you the best possible chance at success.
The key to successful trading is to put the odds in your favor each time you enter into the market. Then, after proper analysis, predetermine your maximum loss, and stick to it, no matter what. If you are stopped out on a certain individual trade with a small loss, pat yourself on the back. You are trading in a disciplined manner, and you will be a winner long term.
You must accept some risk, before you put on a trade. This is the nature of the business. The key is to keep your losses small, and manageable. Accept the results of your trades, without emotions such as fear, greed or hope, entering into your trading equation. Emotional trading is a sure recipe for financial disaster.
Be like a casino. Put on trades only when the odds are in your favor, and then implement solid money management. Once you do this, you are well on your way to making a possible fortune trading the markets.