FX Growth Lesson 7 of 11 7 min read
Risk management
Position sizing, stop losses and risk-to-reward — the rules that keep an account alive.
Why it matters most
No strategy wins every trade. Risk management decides whether a run of losses is a small dip or the end of an account.
Risk per trade
Many professionals risk 0.5–2% of the account on any single trade. Position size = (account × risk %) ÷ (stop distance in pips × pip value).
Risk-to-reward
Aim for setups where the potential reward is at least 1.5–2 times the risk. With 1:2, you can be right only 40% of the time and still be profitable.
Protecting capital
Always use a stop loss, avoid over-leveraging, limit correlated trades and set a maximum daily loss after which you stop trading.
Key takeaways
- Fix your risk before you enter.
- Size positions from the stop distance.
- Capital protection comes before profit.