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Glossary

Risk management

Part of the theme Risk and position sizing.

Definition

Risk management is the discipline of deciding in advance how much you can lose on a trade and on a run of trades, so no single loss or losing streak can end your account.

It is the part of trading you can fully control: you cannot control whether a trade wins, but you can always control what it costs you if it loses. Sound risk management is what lets a small statistical edge compound over many trades instead of being wiped out by one bad run.

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This is an educational credential. It is not a licence, not authorisation to give financial advice, and not a guarantee of trading skill or profit.

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