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Every trade carries risk, and no strategy wins 100% of the time. Risk management is the set of rules that keeps a string of losses from wiping out your account.
A common starting rule is to risk only a small percentage of your account (often 1-2%) on any single trade. That way, even a losing streak leaves you with capital to keep trading and learning.
Stop-loss orders are one of the simplest risk tools: they automatically close a trade if the price moves against you past a level you set in advance. Combined with a sensible position size, a stop-loss turns "how much can I lose on this trade" into a number you decide before you enter — not something the market decides for you.
Real-World Example
A trader with a $10,000 account risks 1% ($100) per trade with a well-placed stop-loss. Even after five consecutive losses, an unlucky but entirely normal streak, they have only lost about 5% of the account and still have plenty of capital and psychological composure to keep trading their edge. A different trader risking 10% per trade hits the same five-loss streak and is down roughly 50%, needing a 100% gain just to get back to even, the exact same string of losses producing two completely different outcomes purely because of position sizing.
This lesson is free — no purchase needed to keep learning.