This is the second post of the trading series. In this post we will learn basics of risk management, which is very important part. For me it is the most important part in my trading. So, I think it is good to make it the second post in the series.

As a beginner trader, you will surely loose money after some time and it is most likely because you didn't managed risk properly. Most beginner have a mentality to day dreaming how much they will make if the trade is successful. This mentality will never help in trading. The mentality should be to protect your capital in 90% of the trade and make profits in remaining 10%.

How can you manage risk?

The best and most popular way to manage risk is to put stoploss. Stoploss is as name suggest, it will stop your loss. You can set stop loss in almost any trading platform. You should never forget stop loss.

What stop loss do?
For example, you kept stop loss at 5% loss and went to sleep. If market crash when you are sleep (or not looking at trade) your position will be sold and you will be saved from hard loss. Markets are sometimes highly volatile, specially crypto market. You must place stop loss!

Where should I place stop loss?
It depends upon which market you are trading and how much confident you are in trade. Trading patterns or indicator and market psychology. I will teach where should you keep your stop loss in patterns and indicator post. It depends on how you are trading but mostly stop loss ranges from 1% to 5% loss.

Trading course series - #1