Foundations of Trading Risk Management
Why Risk Management Comes First The primary difference between traders who survive and those who don’t is not strategy selection, but risk control. A strategy can be statistically sound and still fail if risk is mismanaged. In real markets, execution errors, regime shifts, and drawdowns are inevitable. Risk management exists to ensure that no single mistake — or sequence of mistakes — can end the trading process. Core Principles 1. Fixed Risk per Trade (Not Fixed Size) Rather than thinking in terms of position size, risk should be defined as maximum acceptable loss per trade. ...