Academy · Intermediate

Risk management

Position sizing, stop placement, risk to reward, drawdown and daily loss limits. Every lesson here is arithmetic, which is what makes the rules checkable rather than a matter of taste.

  • ✓ 22 lessons
  • ✓ 88 minutes end to end
  • ✓ Free in MarketPro
  • ✓ No sign-up to start reading

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Risk management is the arithmetic that sits between an idea and a position size. A 20 percent drawdown needs a 25 percent gain to return to the starting balance; a 50 percent drawdown needs 100 percent. That asymmetry is why the size of a loss matters more than how often losses happen, and it is checkable on paper rather than a matter of belief.

This category covers fixed fractional sizing, where a stop belongs and why the chart rather than the wallet should set it, risk to reward and how it interacts with win rate, correlation between open positions, drawdown and recovery maths, daily and weekly loss limits, and the arithmetic of ruin. Work through it with the position size calculator and the risk of ruin calculator open beside you.

It assumes you know what a pip is worth. It pairs with trading psychology, because a sizing rule only does anything if you can still follow it after two losses.

The 22 lessons in order

  1. Position Sizing How to turn an account balance, a risk percentage and a stop distance into a lot size you can hold without flinching. Intermediate4 min
  2. Stop Losses Where a stop loss belongs, why it has to be decided before entry, and the one habit that turns a small planned loss into a large… Intermediate4 min
  3. Risk/Reward Ratios Risk/reward is half of an equation, and the half on its own tells you nothing about whether a strategy makes money. Intermediate4 min
  4. Understanding Drawdown Maximum drawdown is the most honest number in any track record, including your own, because it tells you what the bad stretch… Intermediate4 min
  5. When Not to Trade Not trading is a decision with an expected value, and the trades you decline are usually worth more than the ones you hunt for. Intermediate4 min
  6. Keeping a Trading Journal Memory exaggerates wins, buries losses and invents patterns from three examples. A journal replaces the story with numbers. Beginner4 min
  7. Risk of Ruin and Why It Matters A strategy with a genuine positive edge can still lose everything, because expectancy is an average and ruin is a path. Intermediate4 min
  8. Diversification Across Currency Pairs Open EUR/USD, GBP/USD and AUD/USD and you hold three tickers but one bet, because every forex pair shares its currencies with… Intermediate4 min
  9. Correlation Risk in a Portfolio Each position looks correctly sized, the platform shows three tickets, and a single dollar rally takes all three out within the… Intermediate4 min
  10. The Psychology of Losing Streaks A run of losses is what uncertainty looks like from the inside, and the response to it costs far more than the run itself. Intermediate4 min
  11. Overtrading and Revenge Trading Neither habit shows up as one catastrophic decision. Both show up as a slow gap between the plan you wrote and the trades you… Intermediate4 min
  12. Setting a Daily or Weekly Loss Limit Per-trade risk protects you from a bad trade. A daily loss limit protects you from the decisions that follow three of them. Intermediate4 min
  13. Take Profit Placement Strategies The stop decides what a trade costs when you are wrong. The target decides what it pays when you are right, and it is the one… Intermediate4 min
  14. Trailing Stops Explained Every trailing stop trades one cost for another: exiting early on a pullback, or giving back more when the move finally reverses. Intermediate4 min
  15. Managing Risk Around News Events News risk is one of the few risks you can see coming, which makes being surprised by a scheduled release a planning failure… Intermediate4 min
  16. Scaling In and Out of Positions Scaling gives you more control over a trade and more places to improvise, which is why it only works with rules written before… Intermediate4 min
  17. The Role of Volatility in Risk Management A 20-pip stop is comfortable in a quiet session and pointless after a rate decision, and nothing about your strategy changed in… Intermediate4 min
  18. Hedging Basics in Forex A hedge offsets an exposure you do not want to close. The costs of holding one are the part most traders work out afterwards. Intermediate4 min
  19. Emotional Discipline and Trading Plans The person deciding at 3pm with an open loss is not the one who wrote the rules on Sunday, and asking them to argue it out live… Intermediate4 min
  20. Account Risk Vs Trade Risk Trade risk is what one position costs if it fails. Account risk is what everything open costs if they fail together, and it is… Intermediate4 min
  21. Risk Management for Multiple Open Trades Every ticket can follow the per-trade rule while the account carries an exposure nobody chose and nobody wrote down. Intermediate4 min
  22. Understanding Margin Calls and Stop-Outs A stop-out is not a risk control. It is what happens after every risk control you were supposed to have has already been passed. Intermediate4 min

Guided paths that use these lessons

A path is an ordered run through lessons from several categories, which is how the app sequences them. One path draws on risk management.

Risk Management Mastery

Position sizing, stops, drawdown and the account-protection habits that experienced traders build first.

10 lessons
Trade · Learn · Earn

Take risk management with you

All 22 lessons in this category, plus the other 298 in the academy, with a quiz on each one and your place kept. Free on any MarketPro account, in the app or your browser.

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Not investment advice. Past performance is not indicative of future results.