The single skill that separates traders who survive from those who don't. Strategy gets the credit; risk management does the work.
Never risk more than 1-2% of your account on a single trade. This isn't about position size — it's about the distance from your entry to your stop loss. A bigger position with a tight stop and a smaller position with a wide stop can both be 1% risk.
The math is unforgiving: lose 50% of your account, and you need a 100% gain to get back to even. Lose 80%, and you need 400%. Stay small, stay alive.
Position size = (Account × Risk%) ÷ (Entry − Stop Loss).
Example: $50,000 account, willing to risk 1% ($500). Entry at $100, stop at $95. Risk per share = $5. Position size = $500 ÷ $5 = 100 shares. Now you've sized the trade so a stop-out costs exactly $500.
Every trade has a pre-defined exit. You write it down before you click buy. If the price hits your stop, you're out — no "let me wait for the next candle", no "it'll come back". The traders who blew up did so because they didn't honor their stops.
Aim for trades where your potential reward is at least 2× your potential risk. With a 2:1 R:R, you can be wrong 60% of the time and still make money. With a 3:1 R:R, you can be wrong 70% of the time and still grow your account.
Holding 5 long crypto positions feels like diversification. It isn't — they all move together. Real diversification means uncorrelated bets: long crypto, short oil, long an FX pair driven by different factors. Use a correlation matrix; eyeball it weekly.
Define in advance what you'll do if your account draws down 10%, 15%, 20%. The plan should reduce — not increase — risk-taking after losses. The single fastest way to blow up is to "trade aggressively to make it back".
Leverage doesn't make a bad strategy good — it makes a bad strategy fatal. Whatever leverage your broker offers, halve it. Then halve it again.
Five seconds of discipline before clicking buy saves five months of regret afterward.
