Risk Management
The rules that decide how much of your account is exposed on each trade and overall.
Also known asMoney ManagementPosition Sizing
Definition
Risk management is the framework that sizes positions, places stops, and limits losses so that survival comes before profit. It turns the size of a loss from a feeling into an enforceable rule.
In plain English — Risk management is the set of rules that caps how much you can lose — per trade and across the account — so no single trade or losing streak can wipe you out. It is usually built on a fixed risk-per-trade (a small percentage of equity) plus daily and overall loss limits. It is what separates long-term results from luck.
Example
With a 10,000 balance and a 1% per-trade rule, the maximum acceptable loss on any trade is 100. Stop distance and position size are derived from that number.
Related terms
Where you see this in the app
Educational content only. Map.Trade does not provide financial advice or trading signals.