MODULE 1: Risk Management — How to Survive & Thrive as a Trader

Lesson 1: Why Most Traders Lose — And How to Avoid It

• – Over 90% of retail traders fail due to poor risk management.
• – Most losses come from risking too much on a single trade.
• – The market is a game of probabilities, not guarantees.

Lesson 2: The 1% Rule — Your Survival Lifeline

• – Risk 1% or less of your account balance per trade.
• – This prevents large drawdowns and emotional decision-making.
• – Formula: Risk per Trade = Account Size x Risk %

Lesson 3: Position Sizing — How to Scale Trades Safely

• – Use stop-loss distance and risk amount to determine position size.
• – Formula: Position Size = Risk / (Entry – Stop).
• – Correct sizing maintains consistent risk regardless of stock price.

Lesson 4: Stop-Loss Strategy — Your First Line of Defense

• – Types: Hard stops, mental stops, trailing stops.
• – Best placement: below support, ATR-based, or structure levels.
• – Avoid ‘too tight’ stops that cause early exits.

Lesson 5: Risk-to-Reward Ratios — Trade Like the Casino

• – R:R = Potential Reward / Potential Risk.
• – Target minimum 1:2 R:R for long-term profitability.
• – You can be wrong 60% of the time and still be profitable.

Lesson 6: Your Personal Risk Plan

• – Define your risk percentage per trade.
• – Set a max daily loss limit and trade cutoff rules.
• – Create an emergency plan and risk checklist.