Glossary / Risk
Risk management
Definition
The rules that decide how much you can lose per trade, per day and per month.
Why it matters
Risk rules, not entries, are what keep traders in the game long enough for an edge to show up in the numbers.
Example
1% per trade, 3% per day, 6% per week: hitting any limit means the platform is closed until the next period.
How to track it in a journal
TradeStack calculates the core performance numbers — win rate, average win and loss, profit factor, expectancy, drawdown and consistency — automatically from imported trades, so risk management stops being something you estimate and becomes something you read.
Related terms
R multiple
A trade result expressed as a multiple of the amount you risked.
Risk-reward ratio
The size of your planned target compared with the size of your stop.
Position sizing
Choosing how many shares, contracts or lots to trade based on your stop distance and risk budget.
Drawdown
The decline from a peak in your equity curve to the following trough.
Questions that use this term
Keep reading
Trading journal guides
Expectancy, profit factor, drawdown, backtesting and the PDT rule.
Free trading calculators
Position size, risk-reward, expectancy and options profit.
Expectancy calculator
Expected profit per trade from your own numbers.
Broker CSV export guides
Step-by-step exports for Tradovate, NinjaTrader, IBKR and more.
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