RISK MANAGEMENT FOR NOOBS

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Choose Your Ring

Before you trade anything, choose your style. Day trading means in and out the same day. Swing trading means holding for days or weeks. Position trading means holding for months. Pick one for the trade you are about to take so your actions match the plan.

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Now name the exact setup you see. Maybe it is a bounce off support, a breakout over a recent high, or a clean pullback. Write one sentence that explains why this setup makes sense. If you cannot do that, you do not have a setup. You have a guess.

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Paycheck Math

Decide where you will take profits. Mark a first target, a second target, and a stretch target. These can be earlier highs, round numbers, or simple multiples of your risk. Reward-to-risk ratio, or R:R, is how much you aim to make compared to how much you are willing to lose. If your first target does not pay at least more than you risk, skip the trade.

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Expected value, or EV, is the average result if you took this same trade many times. A simple way to think about it: if you win 40 percent of the time and your wins are twice your losses, your EV is positive. Positive EV plus clear targets beats gut feelings.

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The Seatbelt

A stop loss is the price where you admit the idea is wrong and you exit. Place it at a level that proves the trade failed, like under a clear floor on the chart, not at a random spot. Once set, never move it farther away. Moving it is how small losses turn into disasters.

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Size your position so the dollar loss at the stop is a number you can live with. If losing that amount would wreck your mood or your week, the position is too big. Shrink it until it feels boring. Boring risk survives.

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Bankroll Rules

Set a max risk per trade. Some people use one percent of the account. Pick a number and honor it. Also set brakes for a losing streak. A weekly loss limit triggers a cooldown. A deeper monthly dip means you cut size until you get back in rhythm. The goal is to stay in the game.

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Risk of ruin is the chance you blow up your account. If your trade size is huge and your win rate is shaky, that chance climbs. Keep risk small enough that a cold week cannot end your season.

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Size Like A Sniper

Choose the number of shares or contracts before you enter. Decide in advance if you are allowed to add. Only add when the trade is working and the price is above your original entry, not below. Adding to a loser is how accounts disappear. If you pyramid, make each add smaller than the last and lift your stop so your total risk never grows past the original plan. Winners earn the right to get bigger. Losers go to zero quickly.

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The Heist Plan

Your entry needs a trigger. For example, “Buy if price breaks above yesterday’s high.” Decide the order type and the most slippage you will tolerate. Slippage is the difference between the price you wanted and the price you actually get. If the trigger fails, cancel the order. Do not chase.

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Staying in the trade requires rules too. Use simple guides like higher lows, stronger volume, or a rising average price line to confirm your trend. If those break, consider taking some off. Exits can be partial at each target, with a trailing stop that follows the move. Know what must happen for you to fully exit, besides the stop.

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Event Landmines

Mark the dates that can shake price. Company earnings, inflation reports, Federal Reserve meetings, and jobs data all move markets. Decide today whether you will hold through, reduce size, hedge, or sit out. Write the rule and follow it. If you use options, pick the structure on purpose. Verticals limit risk. Calendars use time. Collars protect a stock you own. Choose expiration (DTE), choose strikes, and have a plan for assignment so you are not surprised on expiration day.

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Alarms Beat Vibes

Set alerts at your entry level, your stop, and your targets. Add alerts at key highs and lows so you notice when character changes. Pay attention to volume spikes and news from the company. Alarms turn chaos into a checklist. Decide your review rhythm. Maybe you check intraday if you day trade, end of day if you swing trade, and weekly for longer holds. Log what happened and what you did. If it is not written down, it did not happen.

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Mindset Kill Switch

Common mistakes are the same for everyone. Averaging down on a loser. Taking revenge trades after a loss. Ignoring stops. Ban these in writing. Do a quick self-check before the session. If you are exhausted, angry, or distracted, trade smaller or not at all. Your brain is part of your risk. This is not monk life. Confidence is fine. Chaos is not. The VHLA way is loud and sharp on the outside, disciplined on the inside.

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Greenlight Check

Before you click buy, ask five questions. Does the trade offer enough reward for the risk. Is the size inside your limits. Do you have a stop, targets, and alerts set. Is there a plan for any big news on the calendar. Is the chance of a blowup low enough to accept. If any answer is no, skip it. You need better trades, not more trades.

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Write one short paragraph that states the plan. Include entry trigger, stop level, targets, position size, and the reasons you will stay in or get out. Put that paragraph where you can see it while the trade is live. Trade the plan you wrote, not the mood you feel. That is how you stop being exit liquidity and start acting like the house.

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