Risk Management
Risk management is the process of controlling how much capital is exposed to potential loss and deciding in advance how trading risk will be handled. It includes position sizing, stop placement, risk per trade, total account exposure and managing multiple positions together.
Why it matters to you
No trading strategy wins every trade. Risk management determines whether losing trades remain manageable or become large enough to seriously damage the account. A trader does not need to avoid losses. They need to prevent ordinary losses from becoming catastrophic ones.
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