If there’s one thing that separates long-term winners from short-term gamblers, it’s risk management. You can have the best strategy in the world, but without controlling risk, even one bad trade can wipe out weeks—or months—of progress.
The first rule is simple: never risk more than 1–2% of your total trading capital on a single trade. This isn’t just a guideline—it’s your safety net. For example, if you have $1,000, your maximum loss per trade should be $10–$20.
Second, always use a stop-loss. Many traders skip this, thinking they can “watch the chart” and exit manually. But markets move fast, and hesitation can turn a small loss into a disaster. Place your stop before entering the trade, and don’t move it unless your strategy says so.
Third, position sizing matters. Traders often think only about entries and targets, but your lot size determines how much you stand to lose or gain. Use a position size calculator to make sure your trade aligns with your risk limit.
Finally, accept that losses are part of the game. Even the best traders lose trades—what matters is keeping those losses small so the wins can cover them. Focus on consistency, not perfection.
Pro Tip: Think of risk management as a defense system. In trading, offense (your strategy) can win you profits, but defense keeps you in the game long enough to enjoy them.
Disclaimer: This content is for educational purposes only and is not financial advice. Always do your own research before trading.
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