How much can this lose?
Position size should come from defined risk, instrument value, stop distance, and account constraints.
RISK FIRST
Risk management is part of the trade.
A directionally correct idea can still become a poor trade when size, leverage, stops, or loss limits are inconsistent.
CORE QUESTIONS
Define what can go wrong before the trade begins.
What proves the idea wrong?
A stop should relate to the reason for the trade, not the desire to avoid taking a loss.
When does trading stop?
Daily limits, consecutive-loss rules, event restrictions, and stand-aside conditions reduce escalation.
What does leverage amplify?
Margin availability is not the same thing as appropriate risk.
Does the system work over a sample?
Win rate alone is incomplete; average win, average loss, frequency, and costs all matter.
Can the process survive bad sequences?
A strategy needs enough risk capacity to survive normal losing streaks.
PRACTICE THE RULES
Rehearse risk before it is tested with real capital.
Use simulated practice to work on sizing, stops, limits, and stand-aside decisions.