Risk Management Masterclass: Position Sizing and Stop Losses

The difference between profitable traders and those who blow up their accounts comes down to one thing: risk management.

The 1% Rule

Never risk more than 1% of your total capital on a single trade.

Position Sizing Formula

Position Size = (Account Risk) / (Entry - Stop Loss)

Types of Stop Losses

1. Fixed Percentage Stop

2. Volatility-Based Stop (ATR)

3. Structure-Based Stop

4. Time-Based Stop

Risk Management Checklist

Before every trade

☐ Position size calculated

☐ Stop loss set

☐ Reward:risk ratio >2:1

☐ Total portfolio risk <5%

☐ Trading plan documented

☐ Emotional state neutral

Risk management isn't sexy, but it's what separates professionals from gamblers.