Risk Management
Position sizing, drawdown control, and surviving evaluation phases.
When to Stop Trading for the Day: Limits That Actually Work
Short answer: stop when you hit a predetermined limit, not when you feel finished. The three limits worth setting in advance are a maximum loss, a maximum number of trades, and a hard finish time.…
Profit Factor in Trading: What the Number Means and How to Use It
Short answer: profit factor in trading is gross profit divided by gross loss across a set of closed trades. Add up every winning trade, add up every losing trade as a positive figure, and divide…
Sharpe Ratio: What It Measures and How Traders Should Use It
Short answer: the Sharpe ratio is your average return above a risk-free rate, divided by the standard deviation of those returns. It measures how much reward you collected per unit of risk and…
Sortino Ratio vs Sharpe Ratio: A Detailed Comparison
Short answer: in the sortino ratio vs sharpe ratio debate, Sharpe divides excess return by total volatility. Sortino divides it by downside deviation only. Sharpe punishes every swing, including…
Trailing Stop Loss vs Trailing Stop Limit: What You Need to Know
Short answer: trailing stop loss vs trailing stop limit comes down to what happens at the trigger. For most retail traders the trailing stop loss is the better default. Both orders follow price by…
The Trading Checklist: What Belongs on It and How to Actually Use One
Short answer: a trading checklist is a short, written set of conditions you verify before, during and after a trade. Its purpose is not to find setups. It is to stop you taking the ones you…
The Ultimate Guide to Trailing Stop Loss Orders
Short answer: a trailing stop loss is an exit order that follows price in your favour and stays put when price moves against you. You set a distance, either in points or as a percentage, and the…
What is a Stop Limit Order? A Complete Guide
Short answer: a stop limit order combines two prices. The stop price activates the order, and the limit price sets the worst price you will accept once it is active. It gives you control over the…
Understanding Revenge Trading: Causes, Consequences, and Prevention
Revenge trading happens when a trader uses the next order to repair the feeling created by a previous loss. The new trade may resemble a valid setup, yet its real purpose is emotional recovery.…
Understanding the Risk of Ruin in Trading
Risk of ruin is the chance that a run of losses pushes an account below the level where a strategy can continue. See what drives it and how to lower it.
Understanding the Risk Reward Ratio: A Comprehensive Guide
The risk reward ratio compares the loss planned for a trade with its potential gain. If the stop is 10 points from entry and the target is 20 points away, the risk reward ratio is 1:2. The first…
Mastering Trading Discipline: Strategies for Success
Trading discipline is the ability to run the same decision protocol when the market is quiet, fast, favourable, or painful. It is built through prepared defaults, small pauses, and visible records.…