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Risk management basics for new traders
No one wins every trade. Risk management makes sure the losing trades don’t knock you out of the game.
1. Risk a small, fixed % per trade
Many educators suggest risking 1% or less of your account per trade. Ten losses in a row (it happens) would then cost about 10%, not your whole account.
2. Know your risk-to-reward
If you risk 20 pips to try to make 40, that’s 1:2. With 1:2, you can be wrong more often than right and still not lose overall — but nothing guarantees results.
3. Set a daily or weekly loss limit
For example: stop trading for the day after losing 3%. It stops “revenge trading”.
4. Keep a trading journal
Write down every trade: why you took it, entry, stop, result. Patterns show up fast.
5. Only trade money you can afford to lose
Never trade rent, retirement savings, or borrowed money.