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When I first started trading, I thought profits came from finding the "perfect entry."
I was wrong. Profits come from capital preservation.
Here is my 3-step risk management checklist before taking ANY position:
1️⃣ The 1% Rule: Never risk more than 1% of your total portfolio on a single trade. If you have $1,000, your maximum loss per trade should be $10.
2️⃣ Invalidate First, Target Second: Before looking at where price *could* go, find the price level that proves your idea WRONG. Set your Stop Loss there immediately.
3️⃣ Position Sizing Equation:
Position Size = (Account Risk in $) ÷ (Distance to Stop Loss in %)
Trading is not about being right 100% of the time. It’s about ensuring your losses are small and your wins are calculated.
👇 What's the #1 rule you strictly follow in your trading system? Let’s discuss in the comments.