If there’s one thing that separates professional traders from gamblers, it's risk management.
You can have the best signals, perfect chart settings, and still lose your entire account if you ignore this rule.
Today, I will show you the exact method to protect your capital and avoid liquidation — no matter how volatile the market gets. 🚀
1. Understand the Risk-Return Ratio (RRR)
The Risk-Return Ratio tells you how much you can gain compared to how much you are willing to lose.
Example:
1:2 RRR means risking $200 to win $400.
1:5 RRR means risking $200 to win $1,000.
The higher the ratio, the fewer times you need to win to remain profitable.
2. Fixed Risk Per Trade
Set a fixed percentage of your capital to risk on each trade — usually 1–2% at most.
For example, if you have $10,000 in your account:
Risk per trade (2%) = $200
Even if your trade fails, you only lose $200 — not your entire account.
This means you can be wrong many times in a row and still have enough capital to trade.
3. Always Set a Stop-Loss
Your stop-loss is your insurance policy.
Without this, you are one bad move away from liquidation.
Set this at a level that invalidates your trade idea — not randomly.
Never move this away hoping the trade will 'come back'.
4. Let Returns Exceed Risks
Look at the chart in the image:
Risking 2% with a 1:5 ratio can give you +10% in a single win.
This means one win can cover five losses.
That’s why professional traders don’t need to win 90% of their trades — they just need to ensure their wins are greater than their losses.
5. Compound Gains, Not Losses
By limiting losses and letting profits run, your account compounds upwards.
If you risk 2% per trade:
Losing streak of 5 trades = -10% only
Winning streak with a 1:4 or 1:5 ratio = +40% to +50%
You survive the days of losses and thrive on the days of wins.
You don’t need to catch every move. You don’t need to win every trade.
You just need discipline, a stop-loss, and a solid risk-return strategy. Follow this method, and liquidation will never be part of your story.
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