The most important rule in trading
The most important rule in trading is to protect your money first. Decide what a trade may cost you before you enter, and never let one loss decide your year.
In depth
Almost every answer to this question comes back to the same thing: fixed risk per trade. You choose a small slice of the account, often one or two percent, and size the position so a stop-out costs that and no more. On a 20,000 dollar account, one percent is 200 dollars.
The rest follows from it. Buy at 100 with a stop at 98 and you risk 2 dollars a share, so 100 shares puts 200 at risk. Ten losses in a row still leave most of the account intact. Skip the rule once and a single trade can undo months.
Why it matters
Losses compound in an ugly way. Lose 50 percent and you need 100 percent to get back to even. A trader who risks 10 percent per trade can be wiped out in one bad week, even with a decent hit rate. Small fixed risk keeps you around long enough for an edge to show.
TraderLog shows what your risk discipline actually looked like. The stats page reports average loser, max drawdown and worst day, and automatic tags flag a size jump after a loss. A fixed five-item daily checklist with an adherence score keeps the rule in front of you.
Frequently asked questions
Risk no more than one percent of your account on a single trade. On 20,000 dollars that is 200 dollars.
Confidence is not information. Fixed risk protects you on the trades you were sure about and wrong.
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