Risk management
The most important level: how much to risk, where to put your stop, how many lots to trade and how to survive losing streaks.
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- 1Why most traders lose moneyOver-leverage, no stop loss, random position sizes, revenge trading, hidden costs: the real reasons traders lose money and how to protect yourself from them.6 min read
- 2The 1% rule: how much to risk per tradeWhy you should risk only 1 to 2% of your capital per trade: losing streaks, drawdown, the maths of recovery and a worked example on a €5,000 trading account.6 min read
- 3The stop loss: where to place it and why you never widen itTechnical or money stop, below the last swing low, based on ATR, guaranteed stops: learn where to place a stop loss logically and why you must never widen it.6 min read
- 4Position sizing: how many lots should you trade?Work out your lot size from the risk you accept and your stop loss. Formula, worked examples on EUR/USD, USD/JPY and gold, and a free built-in calculator.7 min read
- 5The risk-reward ratio (R:R) explained simplyCalculate the risk-reward ratio of a trade and the minimum win rate it requires, and see why a good R:R is not enough alone. Examples and free calculator.6 min read
- 6Win rate and expectancy: does your strategy really make money?A high win rate guarantees nothing. Calculate the expectancy of your trading strategy: the formula, worked examples, thinking in R and the pitfalls to avoid.6 min read
- 7Drawdown: measuring and limiting the drop in your accountDrawdown, max drawdown and duration: how to calculate them, why −50% needs +100% to break even, and how to set your own warning levels before trouble starts.6 min read
- 8Correlation and exposure: when several trades are really oneEUR/USD plus GBP/USD is often one single bet on the dollar. Understand currency correlation, calculate your real exposure and put a cap on your total risk.6 min read
- 9Effective leverage: the leverage you are really usingYour broker's leverage is not the leverage you use. Calculate your effective leverage, see its impact on your account and why the maximum is no target.6 min read
- 10Writing your own risk management rulesRisk per trade, maximum daily and weekly loss, number of trades, stopping after losses: write your trading risk management rules with a ready-made template.6 min read