DRAFT — demo educational content, to be validated by the owner
Managing risk: stop loss and position size
Before entering, decide at which level you are wrong: that is the stop loss. The distance between the entry and the stop sets what you risk on each lot.
Many traders cap risk at 1% of capital per trade. With $10,000, a 20-pip stop and $10 per pip per lot, the risk is $100 against $200 per lot: the position size is 0.5 lot.
The risk/reward ratio (R) compares the targeted gain to the risk taken: entry 1.0841, stop 1.0872, target 1.0795 give 46 pips targeted for 31 pips risked, or 1.48 R. A high R does not replace an honest win rate: both matter.
General educational content: it is neither investment advice nor a recommendation.