Risk Management

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Risk management is what separates profitable traders from gamblers.

**Golden rules:** - Never risk more than 1–2% of your account per trade - Always set a Stop Loss before entering - Aim for a minimum 1:2 Risk-to-Reward ratio - Don't revenge trade after a loss - Keep a trading journal

**Position size formula:** `Lot Size = (Account × Risk%) ÷ (SL in pips × Pip value)`

Knowledge Check

8 questions

1.What is the recommended maximum risk per trade for a beginner?

5–10%1–2%0.1%25%

2.What should you always set before entering a trade?

A take-profit onlyA Stop LossA trailing stop onlyNothing, just enter

3.What is the minimum recommended Risk-to-Reward ratio mentioned in the lesson?

1:11:21:52:1

4.What is revenge trading?

Trading calmly after a winTrading impulsively to try to recover a lossA type of hedging strategyFollowing your trading plan strictly

5.What tool helps track and improve trading performance over time?

A trading journalA random news feedA broker demo account onlySocial media groups

6.In the position size formula, what does SL in pips represent?

The spread of the brokerThe distance to your stop loss in pipsThe size of your accountThe pip value only

7.Why is risk management considered crucial for traders?

It guarantees profitsIt separates profitable traders from gamblersIt removes all lossesIt is optional for experienced traders

8.Which factors are used to calculate lot size in the formula given?

Account size, Risk%, SL in pips, and Pip valueOnly the account sizeOnly the stop loss distanceBroker leverage only

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