"Preserve capital first" - timeless trading wisdom.

Core Strategies

1. Position Sizing: Risk no more than 1-2% of portfolio per trade.
2. Stop-Losses: Define exit before entry. E.g., 8% below entry.
3. Diversification: No more than 5-10 positions.
4. Risk-Reward Ratio: Target 1:3 (risk $1 to make $3).

Hypothetical Application

Portfolio $100K. Risk 1% ($1K) per trade. Stock $50, stop $46 (8%). Max shares: 125 ($1K / $4).

Common Pitfalls

• Averaging down without plan.
• Moving stops.
• Overleveraging.

Final Thought: Good risk management turns average strategies profitable.