Module 1 of 3The arithmetic of riskLesson 1 of 8
Risk is decided before entry, not after
Why the loss is chosen at the start, and by you.
Every position has a worst case. The only question is whether you chose it or discovered it. Choosing it means fixing, before entry, the amount of the account you are prepared to lose on this position — a currency figure, written down, not a feeling.
Everything else in this course follows from that number. The stop distance comes from the chart; the position size is then arithmetic, not judgement. Traders who reverse this order — pick a size, then find a stop that suits it — have let the size decide the risk, which is exactly backwards.
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