Many think that trading is guessing where the market will go. In fact, it is not.
Professional traders do not guess. They work with probabilities and manage risks.
This is why even with 50–60% losing trades, they remain in profit. How? Let's figure it out.
🧠 What is risk management in simple words?
Risk management is a system that helps you not to lose money in trading and to earn steadily, even if you often make mistakes.
It's like a seatbelt in a car:
🚗 You don't plan for an accident, but if something goes wrong — it will save you.
🔐 Main principle: limited risk, unlimited profit
In each trade, you know in advance:
— how much you can lose at maximum
— how much you can earn
Perfect ratio:
📉 risk: 1
📈 profit: 2–3
That is, if you risk $20, you aim to earn $40–60.
📊 Why does this work?
Suppose you made 10 trades:
— 6 of them are in the red
— 4 of them are in profit
Each losing trade: −$20
Each profitable trade: +$60
Let's calculate:
• Losses: 6 × −$20 = −$120
• Profit: 4 × +$60 = +$240
💡 Result: +$120
Even though 60% of the trades were unsuccessful, you are in good profit. This is the power of risk management.
🧮 How to calculate the trade size?
Basic formula:
Trade volume = Risk in $ / Stop-loss in $
📌 Example:
— Your deposit: $1000
— Risk per trade: 2% = $20
— Stop-loss: 80 points
That means:
Volume = 20 / 80 = 0.25 lots
👉 You open 0.25 lots. If the market goes against you by 80 points — you will lose exactly $20. No more.
✅ 5 rules of good risk management:
Don't risk more than 1–2% of your deposit in one trade
Always set a stop-loss — know in advance where the exit is
Calculate the trade volume by the formula, not "by eye"
Evaluate the risk/reward ratio (don't enter if there is no chance for x2 and higher)
Keep a trade journal — learn from your mistakes and victories
📈 Why does this help you earn?
Because:
— You don’t wipe out your account in 1–2 trades
— You earn more than you lose
— You can make mistakes but still be in profit
— You trade calmly, without panic and emotions
🔁 Trading is like a business, not a casino
In business, you always calculate:
— How much you invested
— How much you can lose
— How much will you earn if everything goes as planned
Trading is the same.
You shouldn't put everything on one trade.
You should think in series of trades, like a professional.
💬 In the end
Risk management is your system for survival and growth.
Without it — you are in a casino. With it — you have a strategy that will work in the long run.
Even if 5 trades in a row end up in the red, you will know:
“I do everything right. One profitable trade can cover everything and give a +.”
