Reference Shelf · Reference 8 of 8
Poster: The Risk Rules
The ten rules and the loss-recovery table. Put it where you can see it while you trade.
Print it. Read it before every session. These rules exist because losses compound faster than gains — the table at the bottom proves it.
| # | Rule | Why |
|---|---|---|
| 1 | Risk only 1% of your account per trade | Ten losses in a row still leave about 90% of your money |
| 2 | Decide your exit before you enter | A plan made calm beats a decision made scared |
| 3 | Use a stop loss (an automatic exit order) on every trade | One bad trade can never become an account-ending trade |
| 4 | Never add money to a losing trade to "get back to even" | Averaging down turns a small loss into a huge one |
| 5 | Stop for the day after 2–3 losses | Tilted traders dig holes; fresh traders don't |
| 6 | Size by the stop, not by your gut | Shares = dollars risked ÷ distance to the stop |
| 7 | Never trade money you need for rent, bills, or debt | Scared money makes scared decisions |
| 8 | Write every trade in your journal | What gets recorded gets fixed |
| 9 | No trade is a must-take trade | Cash is a position; the market is open tomorrow |
| 10 | Survive first, profit second | You cannot win a game you have been knocked out of |
Why Losses Hurt More Than Gains Help
| If you are down | You need this gain just to break even |
|---|---|
| 10% | +11% |
| 25% | +33% |
| 50% | +100% |
| 75% | +300% |