Definition
Deciding in advance how much you're willing to lose, on each trade and overall, and sizing and exiting trades to stay within it.
The story
It covers stop-losses, position size, daily loss limits and not putting too much in any one trade. A trader can be right about direction and still lose money without it, and a trader can be wrong often and still survive with it.
Why markets watch it
Without it, a few large losses can undo many small wins.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms