Every trade carries risk, and no strategy wins 100% of the time. Risk management is the set of rules that keeps a string of losses from wiping out your account.
A common starting rule is to risk only a small percentage of your account (often 1-2%) on any single trade. That way, even a losing streak leaves you with capital to keep trading and learning.
Stop-loss orders are one of the simplest risk tools: they automatically close a trade if the price moves against you past a level you set in advance. Combined with a sensible position size, a stop-loss turns "how much can I lose on this trade" into a number you decide before you enter — not something the market decides for you.
This lesson is free — no purchase needed to keep learning.
Browse more lessons →We use cookies to run essential site features, understand how visitors use AutoEdges, and — if you allow it — show relevant ads. See our Cookie Policy for details.