TRADZY Blog
Risk Management
22 guides on risk management — part of the TRADZY Blog.
Position sizing, stops, drawdown and expectancy: the maths that decides whether you survive. Start here: Risk Management in Trading: The Complete Beginner's Guide.
Risk Management
Risk Management in Trading: The Complete Beginner's Guide
Position sizing, stop placement, max daily loss, and drawdown limits explained — the risk management fundamentals that determine whether you survive long enough to get good.
Risk Management
How to Calculate Position Size for a Small Trading Account
A step-by-step position sizing formula for small trading accounts, with worked examples for a $500, $1,000, and $5,000 account.
Risk Management
Win Rate vs Risk-Reward Ratio: Which One Actually Matters?
Why a high win rate can still be a losing strategy, why a low win rate can still be profitable, and the actual formula for expectancy that ties both together.
Risk Management
Max Drawdown Explained: Why It Matters More Than Win Rate
What max drawdown actually measures, why it reveals risk-of-ruin in a way win rate never can, and how to calculate and track it correctly.
Risk Management
CFD Leverage Limits in Europe Explained
How ESMA's retail leverage caps work for CFDs across the EU and UK — the actual ratios by asset class, negative balance protection, and how professional client status changes the limits.
Risk Management
Capital Gains Tax on Trading in the UK Explained
How UK capital gains tax applies to trading profits, the annual exempt amount, the difference between trading as a business vs investing, and where spread betting fits in.
Risk Management
Wash Sale Rule Explained for Traders
What the IRS wash sale rule actually prohibits, the 30-day window, how it affects active traders specifically, and the mark-to-market election that can eliminate it.
Risk Management
Day Trading in a 401(k) or IRA: What's Actually Allowed
What's actually allowed when day trading inside a 401(k) or IRA — restrictions on margin, options, and short selling, plus the tax trade-offs of trading inside a retirement account.
Risk Management
Correlation Risk: Why Your Portfolio Isn't Diversified
Think youre diversified? During crises correlations go to 1. Learn to measure risk. — capital requirements, choosing a market, risk rules, and the habits that actually separate survivors from blown accounts.
Risk Management
Fed Rate Cut Expectations: How to Position Your Portfolio
Federal Reserve rate cuts change everything. Learn which sectors win and lose. — capital requirements, choosing a market, risk rules, and the habits that actually separate survivors from blown accounts.
Risk Management
Kelly Criterion: The Math Behind Optimal Position Sizing
The Kelly Criterion tells you exactly how much to risk. Learn the formula. — capital requirements, choosing a market, risk rules, and the habits that actually separate survivors from blown accounts.
Risk Management
Trading Account Size: How Much Capital Do You Need?
The minimum account size to trade profitably, based on position sizing, commissions, and risk per trade. Start too small and commissions kill your edge.
Risk Management
Daily Loss Limit: How to Stop Trading Before You Blow Up
How to set a daily loss limit, enforce it, and recover emotionally after hitting it. The limit prevents revenge trading and protects your account.
Risk Management
Drawdown Recovery: Why It Takes Longer Than You Think
The math of drawdown recovery: a 20% loss requires 25% gain to break even. A 50% loss requires 100% gain. Understanding this changes how you manage risk.
Risk Management
Leverage in Trading: When It's Safe and When It Kills Accounts
Leverage magnifies both profits and losses. Only use it after 300+ profitable trades. Before that, 1:1 (no leverage) is safer and teaches better habits.
Risk Management
Position Sizing Formula: The Math That Keeps You Alive
The exact formula for position sizing so that every trade risks exactly the same amount (1–2% of your account), regardless of where your stop is.
Risk Management
Profit Factor: The One Number That Predicts Long-Term Profitability
Profit factor = total wins ÷ total losses. >1.3 means solid edge. Most traders chase win rate; focus on profit factor instead.
Risk Management
R-Multiple: Why Traders Use R Instead of Dollars
R is the unit of risk. R = result ÷ risk. A +3R win means you made 3× your initial risk. Using R makes trades comparable across markets and time.
Risk Management
Risk Management in Trading: The Foundation of Profitability
Risk management means risking 1–2% per trade, defining stops before entry, and respecting daily limits. Without it, even profitable setups blow up.
Risk Management
Stop Loss Strategy: Where to Place It and Why Most Traders Get It Wrong
How to place a stop loss at a technical level that defines your risk, whether you hit it or not. Hard stops, mental stops, and trailing stops explained.
Risk Management
Take Profit Strategy: The Right Way to Exit Winners
How to exit winning trades without leaving money on the table or exiting too early. Fixed targets, partial profits, trailing stops, and dynamic exits explained.
Risk Management
Trading Expectancy: The Formula That Shows If You're Profitable
Expectancy = (win rate × avg win) − (loss rate × avg loss). >+0.1R per trade = profitable. Everything else is secondary.