- Risk a small, fixed share of your balance per trade — commonly 1–2%.
- Risk is what you lose if the stop is hit, not the margin you put in.
- Losing streaks are normal; size so that ten losses in a row don't end your account.
- Leverage changes how much margin you use, not how much you should risk.
Most accounts are not lost on one bad trade. They are lost on a series of oversized ones, often taken to win back the previous loss. Risk management is the set of habits that makes sure no single trade — and no losing streak — can take you out of the game.
Risk a small, fixed share
A widely used rule is to risk 1–2% of your balance per trade. Risk here means the amount you lose if your stop loss is hit — not the margin you put into the position.
Notice that leverage only changes the margin. The dollar risk is set by position size and stop distance.
Why small risk matters: losing streaks
Ten losses in a row sounds unlikely, but even a strategy that wins half the time will see streaks like that over a few hundred trades. With 1% risk you can keep going; with 10% the account needs to almost triple just to recover.
Leverage is a tool, not a target
Higher leverage doesn't have to mean higher risk if the position is smaller — but it always moves the liquidation price closer. Keep a clear distance between your stop and the liquidation price so that a spike doesn't liquidate you before your stop has a chance to work.
Limit total exposure
- Count all open positions together. Five trades risking 2% each is 10% at risk at once.
- Correlated positions add up — several crypto longs often behave like one big position.
- Keep part of your balance free so margin requirements never force decisions.
Habits that help
- Set the stop before you enter.
- Don't add to a losing position to average down.
- Take a break after several losses in a row.
- Keep a simple journal: why you entered, where you exited, what you learned.
- Review your statistics in the profile regularly — win rate and average win vs. average loss tell you more than any single trade.
This article is for educational purposes and is not investment advice. Trading with leverage carries a high level of risk and you can lose all invested capital.