Risk Management
Protect your trading capital with the comprehensive risk management tools built into the Trading Platform. From position sizing to daily loss limits, these features help you trade responsibly.
Golden Rule of Trading
Never risk more than you can afford to lose. The risk management tools in this guide help you implement this principle systematically.
Risk Management Overview
Successful trading is not just about finding good trades—it's about surviving the bad ones. The platform provides multiple layers of protection:
| Feature | Purpose | Protection Level |
|---|---|---|
| Position Sizing | Control trade size based on risk | Per-Trade |
| Stop Loss | Limit loss on individual trades | Per-Trade |
| Daily Loss Limit | Pause trading after reaching threshold | Daily |
| Max Position Limit | Limit total exposure | Account |
| Margin Controls | Prevent over-leveraging | Account |
| Drawdown Alerts | Early warning system | Account |
Position Sizing Calculator
The position sizing calculator automatically determines the optimal trade size based on your risk parameters.
How It Works
- Define your risk amount (percentage or fixed)
- Set your stop loss distance
- Calculator determines appropriate lot size
- Position size ensures maximum loss equals your risk amount
Calculation Formula
Position Size = Risk Amount ÷ (Stop Loss Distance × Pip Value)Example Calculation
| Parameter | Value |
|---|---|
| Account Balance | $10,000 |
| Risk Percentage | 2% |
| Risk Amount | $200 |
| Stop Loss | 50 pips |
| Pip Value (EURUSD) | $10 per lot |
| Position Size | 0.40 lots |
Enabling the Calculator
- Open the order entry panel
- Toggle Risk Calculator ON
- Select risk method:
- Percentage: Risk % of account balance
- Fixed Amount: Risk specific dollar amount
- Enter your stop loss level
- Position size updates automatically
Stop Loss Protection
A stop loss is your primary defence against large losses on individual trades.
Stop Loss Methods
| Method | Description | Best For |
|---|---|---|
| Price Level | Set exact price (e.g., 1.0950) | Technical levels |
| Pip Distance | Distance from entry (e.g., 50 pips) | Consistent risk |
| Dollar Amount | Max loss in currency (e.g., $100) | Fixed risk amount |
| ATR-Based | Multiple of Average True Range | Volatility-adjusted |
Require Stop Loss Setting
Enable this setting to prevent placing orders without a stop loss:
- Go to Settings → Trading Preferences
- Toggle Require Stop Loss ON
- Orders without SL will be blocked
Recommended
We strongly recommend enabling "Require Stop Loss" for all traders, especially beginners. A single trade without a stop loss can devastate an account.
Daily Loss Limit
Prevent emotional over-trading after losses by setting a daily loss limit. When reached, trading is paused for the day.
Configuring Daily Loss Limit
- Go to Settings → Risk Management
- Enable Daily Loss Limit
- Set the limit as:
- Percentage: % of account (recommended: 3-5%)
- Fixed Amount: Dollar amount
- Choose action when reached: Warn, Block, or Force Close
Daily Loss Actions
| Action | Behaviour |
|---|---|
| Warn | Show warning notification, allow trading |
| Block | Prevent new trades until next day |
| Force Close | Close all positions and block trading |
Example: With a $10,000 account and 3% daily loss limit ($300), if you lose $300 in a day, trading is paused. This prevents revenge trading and emotional decisions.
Maximum Position Limits
Limit your total market exposure to prevent over-concentration.
Position Limit Types
- Max Open Positions: Total number of concurrent trades (e.g., max 5)
- Max Position Size: Largest single trade allowed (e.g., max 1 lot)
- Max Total Exposure: Combined lot size across all positions
- Max Per Symbol: Maximum exposure to any single instrument
Recommended Limits
| Account Size | Max Open Trades | Max Single Trade |
|---|---|---|
| $1,000 - $5,000 | 2-3 | 0.05 - 0.1 lots |
| $5,000 - $25,000 | 3-5 | 0.2 - 0.5 lots |
| $25,000+ | 5-10 | 0.5 - 2 lots |
Margin Management
Understand and manage your margin to avoid margin calls.
Key Margin Terms
| Term | Definition |
|---|---|
| Balance | Account cash without open trades |
| Equity | Balance + unrealised P&L |
| Used Margin | Margin required for open positions |
| Free Margin | Equity - Used Margin |
| Margin Level | (Equity ÷ Used Margin) × 100% |
Margin Warning Levels
| Level | Margin Level | Action |
|---|---|---|
| Comfortable | >500% | Normal trading |
| Caution | 200-500% | Consider reducing exposure |
| Warning | 100-200% | High risk, add funds or close trades |
| Margin Call | 100% | No new trades allowed |
| Stop Out | 50% | Positions auto-closed |
Margin Alerts
Configure alerts to warn you before margin issues occur:
- Go to Settings → Notifications
- Enable Margin Warnings
- Set warning threshold (e.g., 200%)
- Choose notification methods (in-app, email, push)
Drawdown Monitoring
Track your account drawdown to identify risk of ruin before it happens.
Drawdown Metrics
- Current Drawdown: Current decline from peak equity
- Maximum Drawdown: Largest historical decline
- Recovery Factor: Profit ÷ Maximum Drawdown
Drawdown Alerts
Set alerts to notify you when drawdown exceeds thresholds:
- 5% Drawdown: Early warning
- 10% Drawdown: Review strategy
- 20% Drawdown: Consider pausing trading
Recovery Reality: A 20% loss requires a 25% gain to recover. A 50% loss requires a 100% gain. This is why preventing large drawdowns is crucial.
Correlation Risk
Avoid hidden exposure by understanding correlated instruments.
Highly Correlated Pairs
Trading multiple correlated pairs multiplies your risk:
| Pair 1 | Pair 2 | Correlation |
|---|---|---|
| EURUSD | GBPUSD | Strong Positive |
| EURUSD | USDCHF | Strong Negative |
| AUDUSD | NZDUSD | Strong Positive |
| Gold | AUDUSD | Moderate Positive |
Hidden Risk
If you buy EURUSD and GBPUSD simultaneously, you're effectively doubling your exposure. If both move against you, losses multiply.
Risk Dashboard
Monitor your risk metrics in real-time from the Risk Dashboard.
Dashboard Metrics
- Total Exposure: Combined value of all positions
- At-Risk Amount: Maximum loss if all stops hit
- Daily P&L: Today's realised + unrealised
- Margin Utilisation: % of margin in use
- Correlation Heatmap: Visual exposure analysis
Accessing the Dashboard
- Click Risk in the main navigation
- Or use keyboard shortcut
Cmd/Ctrl + R
Risk Management Checklist
Use this checklist to ensure proper risk controls:
- ☑️ Position sizing calculator enabled
- ☑️ Risk per trade set (1-2% recommended)
- ☑️ "Require Stop Loss" enabled
- ☑️ Daily loss limit configured (3-5%)
- ☑️ Maximum position limits set
- ☑️ Margin warning alerts enabled
- ☑️ Drawdown alerts configured
- ☑️ Correlation risk understood
Next Steps
- Risk Management Education - In-depth principles
- Setting Stop Losses - Practical guide
- Analytics - Track your performance
- Trading Psychology - Emotional discipline
Risk Disclosure
Trading involves substantial risk of loss. Risk management tools reduce but do not eliminate risk. Slippage and gaps can cause losses beyond your stop loss. Never trade money you cannot afford to lose.