Risk management

Nothing else on this site matters if you skip this page. Risk management is the only part of trading fully within your control — and the only edge available to everyone.

Position sizing: the only free lunch

Decide your maximum loss per trade first — a common rule is 1–2% of your account — then work backwards to the stake. With £2,000 and a 2% rule, your maximum loss is £40: a 40-point stop means £1/pt, no matter how confident you feel. Confidence is not a position-sizing input. Use the calculator to see exposure before you commit.

Stop-losses: placement and honesty

A stop is your pre-commitment to being wrong at a price you chose while calm. Place stops where your idea is invalidated — beyond a support level, not at a round number of pounds lost. Ordinary stops can slip in fast markets; guaranteed stops cost more but cap the true worst case. Moving a stop further away mid-trade is how small losses become account-enders.

Order types worth knowing

Market orders fill now at the quoted price. Limit orders fill only at your price or better — use them to enter on pullbacks and take profits. Stop orders close (or open) positions once a level trades. Trailing stops follow a winning position at a set distance. Guaranteed stops always fill at your level regardless of gaps, for a wider spread or premium — the only true worst-case cap around news and weekends.

Keep a journal

Log every trade: the setup, the stake, the stop, the outcome, and what you felt. After thirty trades, patterns appear — usually the same two or three mistakes on repeat. The journal turns tuition fees into an education.

The house rules

Never add to a losing position. Never trade to win back a loss. Never risk the rent. And never confuse a winning week with skill until the journal proves it across months. If trading stops feeling like decisions and starts feeling like compulsion, stop: BeGambleAware offers free, confidential help.