Risk Management and Position Sizing for Beginning Traders
Risk Management
Understand how to protect capital with position sizing, stop-loss placement, and risk-reward planning.
Risk management is the foundation of long-term trading success.
- Always define your maximum loss before entering a trade.
- Use position sizing so each trade risks only 1–2% of account equity.
- Place stop losses below support or above resistance.
- Aim for at least a 1:2 risk-reward ratio.
Growing your account requires consistency. Even good trades can fail, so protecting downside is more important than chasing gains.