Risk per trade: why position size matters more than the entry
Risk management
Even a strong strategy goes through losing streaks. Whether the account survives one depends not on the entry point, but on how much risk the trader takes in each position.
A fixed percentage
A common approach is to risk a small, predefined share of the account on every trade. Position size is then calculated from the distance to the exit level instead of being chosen by eye.
Exit level before entry
The level at which the idea is proven wrong is set before the position is opened. If you cannot name it in advance, the trade has no plan — only hope.
Account limits
Besides risk per trade, keep track of the overall daily and maximum drawdown. These limits set the frame the whole trading system works within.
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