Position sizing, stop-losses and the 1% rule: the habits that separate traders who last from those who don't.
Most traders fail not because their analysis is wrong but because their risk management is. A handful of habits protect your capital through the inevitable losing streaks.
Risk a fixed fraction per trade
Professionals typically risk 1–2% of account equity per trade. At 1%, a run of ten consecutive losses costs under 10% of your account — survivable. At 10% per trade, the same run is catastrophic.
Size from your stop, not your margin
Decide where your stop-loss belongs first, based on the chart. Then calculate the position size that makes that stop equal your chosen risk. Never work backwards from available margin.
Respect the risk-reward ratio
If you only take trades where the potential reward is at least twice the risk, you can be wrong more often than you are right and still be profitable.
This article is general education, not investment advice.
