💰 Capital Management (Risk Management): The secret that protects you from one trade!
You can be a great analyst…
But if you risk a large portion of your capital on a single trade, one loss can erase several winning trades.
🎯 The Basic Rule:
Determine your risk first… then determine your position size.
Example:
Your capital = $1,000
You decide your maximum acceptable loss per trade = 1%
➡️ Risk = $10
If your stop loss is 5% away from your entry, it does NOT mean you should enter with the full $1,000.
Approximate position size:
$10 ÷ 5% = $200
This means you risk approximately $10 if the price reaches the Stop Loss, before fees and slippage.
🧠 Remember:
Position size ≠ amount of risk
You can have a large position, but the risk is calculated based on where your Stop Loss is placed.
❌ Mistakes that destroy accounts:
- Doubling down to recover a loss.
- Using high leverage without understanding its risks.
- Risking a huge portion of your capital on a single trade.
- Moving your Stop Loss farther away because you don’t want to admit the loss.
🔥 The Most Important Idea:
Your goal is not to win every trade.
Your goal is to remain able to trade after a series of losing trades.
🛡️ Risk Management:
There is no one-size-fits-all risk percentage.
Choose a level that matches your capital, your strategy, and your ability to withstand losses.
Protect your capital first… then think about profits.
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