1. Importance of Risk Management
Every trader must control risk to survive in the market:
- Prevents account blowouts from a single trade.
- Keeps emotions in check.
- Helps maintain consistent growth.
2. Position Sizing
Decide how much to risk per trade using this formula:
- Risk per trade = Account size × Risk percentage (usually 1–2%).
- Stop-loss distance determines lot size.
- Smaller positions reduce stress and exposure.
3. Stop-Loss and Take-Profit
Protect gains and limit losses:
- Stop-Loss: Automatically closes losing trades to prevent bigger losses.
- Take-Profit: Automatically closes profitable trades at target.
- Always plan trades with stop-loss and take-profit.
Key Takeaways
- Never risk more than a small percentage of your account on one trade.
- Use stop-loss and take-profit for safety.
- Risk management is as important as strategy.