Lesson 6 · Basic · 8 min
Risk management
The 1–2% rule, risk/reward ratio and why survival matters more than returns.
The 1–2% rule
Risk no more than 1–2% of your deposit per trade. Even ten losing trades in a row will then leave you with over 80% of your capital — enough to continue and fix mistakes.
Risk/reward ratio
If the potential profit is twice the risk (1:2), even 40% winning trades give a positive result. Calculate the ratio before entering.
Example
Risk $100, target $200. Of 10 trades, 4 win (+$800) and 6 lose (−$600). Result: +$200.
Losses are harder to recover
After losing 20% you need to make 25%; after 50% — a full 100%. So the main task is to avoid large drawdowns.
Trading journal
Write down the reason for entry, the stop, the target and the result of every trade. After a month you will see which decisions work and which do not.
Key takeaways
- No more than 1–2% risk per trade
- Look for trades where reward exceeds risk
- Preserving capital beats quick profit