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Your first edge?
Understanding risk.

A bigger position is not always a better decision. Learn how risk, stop distance and position size fit together, then test yourself.

LESSON 01 / RISK BEFORE RETURN

The amount you buy is not the amount you risk.

Imagine a virtual account of $10,000. A 1% risk budget means planning for a $100 loss if your stop is reached. If your stop is 5% below entry, the position is $2,000.

Position size = risk budget ÷ stop distance
$100 ÷ 0.05 = $2,000

A stop order does not guarantee an exit price. Gaps, slippage and fees can make the actual loss larger. A smaller risk budget gives you more room to learn from mistakes.

A useful trade-off

With the same $100 budget, a 2% stop implies a $5,000 position. A tighter stop makes the position larger; it does not make the market safer.

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CHECK YOUR UNDERSTANDING

You have $10,000.
You risk 1%.

With a stop 5% below entry, what is the position size, before fees?

Next: put it into practice
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BEFORE YOUR NEXT STEP

Position sizing, explained.

Why is a $2,000 position a $100 risk?

Before costs, a 5% adverse move on $2,000 is $100. The position is the amount exposed; the risk budget is the planned loss. The trade planner includes illustrative entry and exit fees when sizing.

Does a stop guarantee that loss?

No. A gap or a worse execution price can exceed the planned amount. Compare the assumption with actual execution when you review a demo trade.

What should I do after the quiz?

Open the trade planner, choose an asset and record what would invalidate your idea before saving the scenario.

Skills