Good risk management is what keeps traders in the game. Learn the essentials of protecting your capital.
Protect Your Capital First
Successful traders focus on not losing money before they focus on making it. Risk management is the foundation of survival.
The Stop-Loss
A stop-loss automatically closes a losing trade at a set level, capping your loss. Every trade should have one.
Position Sizing
Risk only a small percentage of your account, often 1-2%, on any single trade. This ensures no single loss can seriously hurt you.
The Risk-Reward Ratio
Aim for trades where the potential reward is larger than the risk, such as 2:1, so you can be profitable even without a high win rate.
Consistency Wins
Discipline and consistent risk rules beat lucky wins over the long run.