Advanced risk & position sizing

The Basics gave you the one rule: risk a small fixed percent. Pro is about everything that sits around that rule — because at this level, how you lose matters more than how you win. Protect the downside and the upside takes care of itself.

Why protecting capital is everything

Losses and gains are not symmetric. Lose 50% and you don’t need 50% back — you need 100% just to break even. The deeper the hole, the more brutal the climb. Drag it and watch the recovery math turn vicious:

This is why pros obsess over small losses. A trader who never lets a drawdown get deep only ever needs modest gains to recover — and stays in the game.

Think in R, not dollars

The pro’s unit isn’t money — it’s R, where 1R is the amount you risked on a trade. A win that makes twice your risk is +2R; a full stop-out is −1R. Speaking in R lets you compare every trade across any market or account size on one honest scale: did this idea pay more than it risked?

Watch your total heat

Risk isn’t per-trade only — it’s across all open positions. Five “1% risk” longs on correlated markets (say EUR, GBP and gold all vs the dollar) isn’t five small bets; it’s one 5% bet on the dollar falling. Cap your total open risk — your heat — not just each trade.