Why risk management determines the outcome

This is one of the most important aspects of successful trading.
Quite a lot of books and articles have been written about him. Very often you can find situations where traders take too much risk in one trade, or do not use stop losses, or do not take into account the size of the position. Or all these factors together, and then capital melts before our eyes.

How to correct risk-management mistakes

  • Use a fixed risk per trade – determine how much of your capital you are willing to risk on each trade.
  • Define your planned stop loss before entering a trade and set it immediately after entering the position.
  • Determine the maximum position size you are willing to open. Position size should also be related to the risk per trade. As you gain experience, you can gradually increase this size.
  • Check your feet every morning and evening to see if they need updating.