Risk management is what separates traders who blow up their accounts from those who don't. The four core rules: never risk more than 1–2% of your account on a single trade, always use a stop-loss, size positions based on the stop distance (not on conviction), and limit total exposure across all open positions. For deeper learning, visit the nomo Education hub at nomotrade.com/en/education or the nomo Academy at nomo.academy.
Rule 1: Risk per trade
Risk no more than 1–2% of your account on any single trade. With a $1,000 account, that's $10–$20 per trade. This may feel small, but it lets you survive a string of losses — and any trader will hit one. At 2% per trade, ten consecutive losers leaves you with about 82% of your starting capital. At 10% per trade, the same ten losers wipe you out completely.
Rule 2: Always use a stop-loss
A trade without a stop-loss is not a trade — it's a hope. The stop is the price at which you've predetermined the trade was wrong, and the loss should be cut. Without it, small losers turn into account-killing disasters because emotion takes over. Set the stop before you enter, and never move it further away once the trade is open.
Rule 3: Size from the stop, not from conviction
Position size should be derived from your stop-loss distance, not from how confident you feel. If your stop is 50 pips away and you're risking $20 (2% of $1,000), then you're trading 0.4 micro-lots. If the same trade required a 100-pip stop, you'd halve the position. "I'm sure about this one, so I'll go bigger" is the most expensive sentence in trading.
Rule 4: Limit total exposure
Risking 2% per trade across five highly correlated positions is the same as risking 10% on one. If you have multiple Forex longs against the dollar, they tend to move together — the dollar's move drives them all. Keep total risk across open positions to no more than 4–6% of your account, accounting for correlation.
What good risk management looks like in practice
You know your maximum acceptable loss per trade in dollars before you click Buy.
Your position size is the result of (risk in dollars) ÷ (stop distance in pips × pip value).
You can sleep at night knowing what your worst case is for every open position.
Losses don't tilt you into revenge trading because individual losses are small relative to your account.
Your trading journal includes the planned risk and stop level for every trade — and how it actually played out.
Where to learn more
nomo Education hub - foundational platform and risk content.
nomo Academy — deeper trading courses and concept walkthroughs.
All educational content is informational and does not constitute personalised financial advice.