【Risk Management: Decide the Maximum Loss First, Then Talk About Returns】
Before placing an order, answer three questions: How much am I willing to lose at most in this trade? Where will I put the stop-loss? If the stop-loss is triggered, will my position size still allow me to withstand it?
Position size should not be chosen based on guesswork; it should be determined by your risk budget and the stop-loss distance. Don’t put all your funds into a single asset, and don’t increase leverage just because you’ve had a streak of profitable trades. A stop-loss is not evidence of a failed prediction—it’s an acknowledgment of uncertainty. Diversifying, using low leverage, and writing exit rules in advance are often more important than frequently chasing hot trends. This article is for risk education only and does not constitute investment advice.
Before placing an order, answer three questions: How much am I willing to lose at most in this trade? Where will I put the stop-loss? If the stop-loss is triggered, will my position size still allow me to withstand it?
Position size should not be chosen based on guesswork; it should be determined by your risk budget and the stop-loss distance. Don’t put all your funds into a single asset, and don’t increase leverage just because you’ve had a streak of profitable trades. A stop-loss is not evidence of a failed prediction—it’s an acknowledgment of uncertainty. Diversifying, using low leverage, and writing exit rules in advance are often more important than frequently chasing hot trends. This article is for risk education only and does not constitute investment advice.