Risk Management for Traders (MOST IMPORTANT)

Why Risk Management Matters

You can be wrong 50% of the time and still be profitable — if risk is controlled.

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Golden Rules of Risk Management

1. Never risk more than 1–2% per trade

2. Always use stop-loss

3. Maintain risk-reward of 1:2 or higher

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Position Sizing Formula

Risk per trade = Capital × 1%
Position size = Risk ÷ Stop-loss

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Stop-Loss Types

• Fixed SL

• Percentage SL

• Trailing SL

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Risk-Reward Ratio

• Risk ₹1 to make ₹2 or ₹3

• Even with 40% accuracy → profitable

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Emotional Risk Management

• Avoid revenge trading

• Accept losses

• Follow trading plan

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Trading Psychology Tips

• Losses are business expenses

• Consistency > Big profits

• Discipline beats strategy

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Final Conclusion

Risk management is the difference between traders who survive and those who quit. Protect capital first — profits will follow.

Categories: Capital Protection, Position Sizing, Risk Management Trading, Risk Reward Ratio, Stop Loss Strategy, Trading Discipline, Trading Psychology