Risk Management: Protecting Your Capital 🛡️

💡Pro Insight

Remember: It's not about how much you make, but how much you keep! Professional traders focus on risk before reward. 💰

The 1% Rule

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

Real-World Example: With a $10,000 account, your maximum risk per trade is $100 (1%). If you're buying AAPL at $170 and placing a stop loss at $165, your position size would be:

  • Risk per share = $5 ($170 - $165)
  • Position size = $100 ÷ $5 = 20 shares
  • Total position value = 20 × $170 = $3,400
ℹ️Position Size Formula

Position Size = (Account × Risk%) ÷ (Entry - Stop Loss)

Risk-Reward Ratio

Aim for minimum 1:2 risk-reward ratio.

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