Risk & Money Management

The market often experiences periods of uncertainty when supply and demand are balanced, making it difficult to determine the price trend. During such times, losing trades are inevitable, and this is a natural part of trading since it is impossible to win every trade. Therefore, the key objective for traders is to minimize losses and manage risks effectively.

Risk management helps protect capital from significant losses and ensures long-term stability. Its main goal is to develop an efficient system for minimizing losses. This involves setting limits and restricting maximum losses. It is also essential to establish profit targets in advance and secure profits once the planned level is reached.

Money management focuses on capital allocation and position sizing, helping traders maximize profits while minimizing risks.

• The position size should be calculated so that the potential loss does not exceed the predefined risk level. After successful trades, it is important not to increase the position size excessively to avoid unnecessary risk.

• Never invest your entire capital in a single trade. It is crucial to maintain a sufficient reserve to participate in future trades and recover from potential losses.

By adhering to risk management and money management principles, traders can maintain stability and achieve consistent profitability.