Risk Management for Traders
Position sizing, stop-losses, and portfolio protection strategies.
Risk Management: The Skill That Keeps You in the Game
The best trading strategy is worthless without proper risk management. This hub covers position sizing, stop-loss techniques, portfolio allocation, and the psychological discipline needed to survive inevitable drawdowns.
The 1% Rule
Never risk more than 1-2% of your account on any single trade. This simple rule ensures you survive a string of losses without catastrophic damage to your capital.
Articles
Coinbase vs Kraken: Which Crypto Exchange is Better?
Coinbase or Kraken for crypto? We compare fees, security, and user experience.
TD Ameritrade vs E*TRADE: Best for Options Trading?
Choosing between TD Ameritrade and E*TRADE for options? We compare platforms and fees.
How to Start Trading Stocks with $100 in 2026
You don't need thousands to start investing. Learn how to begin with just $100.
Best Crypto Exchanges 2026: Top 5 Platforms Compared
Looking for the best crypto exchange? We compare the top 5 platforms to help you trade with confidence.
Robinhood vs Webull 2026: Which Trading App is Best?
Choosing between Robinhood and Webull? We compare fees, features, and user experience to help you decide.
Common Questions
What's the minimum amount needed to start trading?
Many online brokers now offer $0 minimums for stock trading. Forex typically requires $100-$500 for micro accounts. Options usually needs $2,000+ for margin accounts.
Stock broker vs forex broker - which do I need?
Stock brokers offer equities, ETFs, and options. Forex brokers specialize in currency pairs with higher leverage. Some like Interactive Brokers offer both. Consider fees, platforms, and asset variety.
What trading fees should I watch out for?
Key fees: commissions per trade, spreads, overnight/swap fees, inactivity fees, withdrawal fees, and data subscriptions. Commission-free doesn't mean free - brokers may earn from payment for order flow.
Is day trading profitable for beginners?
Statistics show 70-90% of day traders lose money. Success requires education, practice, disciplined risk management, and $25,000+ for US pattern day trading rules. Start with swing trading.
Key Terms
Stop-Loss Order
An order that triggers a market sell when a stock drops to a specified price, limiting potential losses. A stop at $45 on a $50 stock means it sells (at market) if the price touches $45. Stop-limit orders add a price floor but risk not executing in a fast decline.
Trailing Stop
A dynamic stop-loss that follows the price upward by a set amount or percentage but doesn't move down. A 5% trailing stop on a stock that rises from $100 to $120 would trigger at $114. Locks in profits while allowing for continued upside.
Margin Call
A broker's demand for additional funds when your account equity falls below the maintenance margin requirement (typically 25-30% of positions). If you can't deposit funds, the broker liquidates your positions at market prices — often at the worst possible time.
Leverage
Using borrowed money to increase position size beyond your cash balance. 2:1 margin means $10K buys $20K of stock. Amplifies both gains and losses. Options provide implicit leverage — a $3 call option can control $100+ of stock. Most retail traders lose money with leverage.
Risk Management
The practice of controlling potential losses through position sizing, stop-losses, diversification, and portfolio allocation. The most important trading skill. Common rule: never risk more than 1-2% of your account on a single trade. Surviving drawdowns is more important than maximizing gains.