Why Risk Management Is the Backbone of Trading
Trading attracts people for all sorts of reasons—freedom, potential profits, and the thrill of reading the markets. But here’s the harsh truth: most traders don’t fail because they can’t read a chart or don’t understand a strategy. They fail because they don’t respect risk. Risk management is not a side topic. It’s the entire game. If you get this part wrong, it doesn’t matter how sharp your entries are—you’ll blow your account. If you master this, even with an average system, you can survive long enough to grow and improve. In this post, we’ll break down risk management in simple, practical terms, explore how traders often misuse it, and show how to approach it with discipline. 1. What Is Risk Management in Trading? Risk management is the process of protecting your trading capital. It’s the rules you set for yourself to make sure one bad trade—or even a series of bad trades—doesn’t wipe you out. Think of it as seatbelts for your account. You might not need them when the r...
