Most traders don't blow accounts because their analysis was wrong. They blow accounts because a correct read on the market was sized too aggressively.
Rule 1: Risk a Fixed Percentage, Not a Fixed Dollar Amount
Typically 0.5%–1% per trade, recalculated every time based on current balance.
Rule 2: Set a Daily Loss Cap Below the Firm's Limit
Treat 2% as your real ceiling even if the firm allows 5%.
Rule 3: Define Your Stop-Loss Before You Enter
A predetermined exit that invalidates the setup, decided before emotion enters the trade.
Rule 4: Size Position, Don't Size Confidence
Keep position sizing formula the same regardless of how sure you feel about a setup.
Rule 5: Cap Total Exposure Across Correlated Positions
Treat correlated trades (e.g. multiple USD pairs) as one combined risk.
Rule 6: Have a Weekly and Monthly Loss Limit, Not Just a Daily One
A string of small losing days within the daily limit can still damage a week — set a weekly stop (e.g. 4–5%).
Rule 7: Journal Every Trade's Risk Decision, Not Just the Outcome
Log planned risk, actual risk taken, and whether it matched your rules.
The Rule Behind All the Rules
Every rule exists to protect your ability to keep trading tomorrow.
FAQ
What's a realistic risk-per-trade for a beginner?
0.5% is a sensible starting point.
Should risk management rules change once I'm funded vs. in the challenge?
The rules shouldn't change, though psychological pressure often does — treat funded accounts with the same discipline.
How do I know if I'm unconsciously sizing up on trades I feel good about?
Review your journal for whether your largest position sizes correlate with "high conviction" trades rather than your standard formula.
Trading Forex and CFDs involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results. This article is educational content only and not financial advice.