Risk Management
Position sizing, stop losses, risk-to-reward and protecting your capital.
Protect capital first
Your capital is your most important tool. Risk management is about staying in the game long enough for your edge to play out across many trades.
Risk per trade
Many traders risk a small, fixed percentage of their account on each trade — often 0.5% to 2%. A fixed percentage keeps a normal losing streak from becoming a disaster.
Stop losses
A stop loss marks the price at which your trade idea is wrong. Place it at a logical level on the chart, then size the position around it — never the other way round.
Position sizing
Position size comes from account size, risk percentage and stop distance — not from confidence. The Position Size Calculator in the toolkit does this maths for you.
Risk-to-reward and expectancy
Comparing potential reward to risk shows whether a trade is worth taking. At 1:2, you only need to win about 34% of trades to break even. Expectancy combines win rate and reward to show your average result per trade.
Key takeaways
- Risk a small, fixed % per trade.
- Stop first, position size second.
- Higher R:R lowers the win rate you need.
Position Size Calculator
Lot size from account, risk % and stop loss.
Trade Grind provides educational content for informational purposes only. Nothing on this website should be considered financial or investment advice. Trading involves risk, and past performance does not guarantee future results.
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