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Risk Management

Protect your capital with proper risk management. The difference between profitable traders and blown accounts is risk control. Here’s how to trade safely with TradeWzrd.

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The Golden Rule

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Never risk more than 1-2% per trade

Why?
  • Lose 10 trades in a row at 2% risk → Down 20% (recoverable)
  • Lose 10 trades in a row at 10% risk → Down 65% (wipeout)
Example:
  • Account balance: $10,000
  • Risk per trade: 2% = $200
  • If SL is hit, you lose $200 max

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Position Sizing Methods

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Method 1: Fixed Lots (Simple)

Always trade the same volume Example: 
BUY, EURUSD, VOL=0.1
Pros: Simple, consistent Cons: Doesn’t account for SL distance or account size When to use: Small accounts (\u003c$1,000), scalping with tight SLs
Calculate lot size based on risk % and SL distance Formula: 
Lot Size = (Account Balance × Risk %) / (SL Distance in Pips × Pip Value)
TradeWzrd calculates this automatically! Example signal: 
BUY, EURUSD, RISK=2, SL=20, TPSLType=PIPS
What happens:
  • Account: $10,000
  • Risk: 2% = $200
  • SL: 20 pips
  • System calculates: 0.10 lots (20 pips × 0.10 lots × 10/pip=10/pip = 200)
Pros: Precise risk control, accounts for SL distance Cons: Requires SL to be set When to use: ALL serious trading

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Method 3: Proportional (Copy Trading)

Copy X% of sender’s volume Example:
  • Sender opens 1.0 lot
  • Receiver set to 50% proportional
  • Receiver opens 0.5 lot
Pros: Scales with sender Cons: Doesn’t account for account size differences When to use: Copy trading when sender/receiver have similar balances

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Stop Loss Strategies

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Always use Stop Loss

Never trade without SL — this is suicide. SL placement methods:
MethodDescriptionExample
Support/ResistanceBelow support for longs, above resistance for shortsBUY @ 1.0900, SL @ 1.0880 (support)
Fixed pipsSame pip distance every tradeAlways 20-pip SL
ATR-basedMultiple of Average True Range1.5× ATR = 30 pips
Risk/RewardSL = 1/2 of TP distanceTP @ 40 pips, SL @ 20 pips

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Trailing Stop Loss

Move SL as trade goes in your favor Example:
  1. BUY EURUSD @ 1.0900, SL @ 1.0880
  2. Price moves to 1.0950 (+50 pips profit)
  3. Modify SL to 1.0920 (breakeven + 20 pips)
  4. Now you can’t lose — worst case is +20 pips profit
How to do this in TradeWzrd:
  • Terminal: Click position → Modify → Update SL
  • Automation: Send MODIFY signal
MODIFY, EURUSD, SIDE=BUY, SL=1.0920, TPSLType=PRICE

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Take Profit Strategies

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Full Close vs Partial Close

Option A: Full close at single TP 
BUY, EURUSD, VOL=0.1, TP=1.0950
  • Simple, clean
  • All-or-nothing
Option B: Partial close (scale out) 
# Initial trade: 0.2 lots
BUY, EURUSD, VOL=0.2, SL=20, TPSLType=PIPS

# At +30 pips: Close half
CLOSE, EURUSD, SIDE=BUY, PERCENT=50

# Move SL to breakeven
MODIFY, EURUSD, SIDE=BUY, SL=0, TPSLType=PIPS

# Let rest run to +100 pips
Pros: Lock partial profit, let winners run Cons: More complex, more commissions

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Risk/Reward Ratio

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Minimum 1:2 ratio

For every 1yourisk,aimtomake1 you risk, aim to make 2 Example:
  • Risk: 20 pips (SL)
  • Reward: 40 pips (TP)
  • Ratio: 1:2 ✅
Why this matters:
  • Win rate: 40%
  • Avg win: +40 pips
  • Avg loss: -20 pips
  • Expected value: (0.4 × 40) - (0.6 × 20) = +4 pips per trade ✅
Bad example:
  • Risk: 50 pips
  • Reward: 25 pips
  • Ratio: 2:1 ❌ (need 67% win rate just to break even)

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Max Positions

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Don’t overtrade

Guidelines:
Account SizeMax Open Positions
\u003c $1,0001-2
1,000−1,000 - 5,0002-3
5,000−5,000 - 10,0003-5
$10,000+5-10
Why?
  • Too many positions = over-leverage
  • Hard to monitor
  • Correlated positions (EURUSD + GBPUSD often move together)

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Drawdown Management

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Know when to stop

Max daily loss rule: If down 5% in a day, STOP TRADING Example:
  • Account: $10,000
  • Max daily loss: 5% = $500
  • After 3 losing trades (2% each = 6% total) → Close terminal, take a break
Max monthly drawdown: 10%
  • If down 10% in a month, reduce position sizes by 50% until you recover

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Account Size Recommendations

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Minimum account sizes by platform

PlatformMinimum Recommended
MT4/MT5$500 (micro lots)
TradeLocker$100
Demo$10,000 (practice like it’s real)
Why?
  • Smaller accounts = less room for drawdowns
  • Need buffer for multiple losses

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TradeWzrd Risk Settings

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How to implement risk % in signals

Automation (Webhooks): 
BUY, EURUSD, RISK=2, SL=20, TPSLType=PIPS
Terminal:
  1. Order Panel → Toggle “Use Risk”
  2. Enter risk % (e.g., 2)
  3. Enable SL (required for risk calculation)
  4. System calculates lot size automatically
Copy Trading:
  • Use “Risk %” mode in receiver settings
  • Each receiver risks 2% of their balance (not sender’s)

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Common Mistakes

❌ Bad: Risk 10% per trade✅ Good: Risk 1-2% maxWhy: 5 losses in a row = 50% drawdown (need 100% gain to recover)
❌ Bad: “I’ll just close manually if it goes against me”✅ Good: Always set SL before enteringWhy: Emotions, distractions, internet outage = blown account
❌ Bad: SL getting close → Move it 50 pips further✅ Good: Accept the loss, plan better next timeWhy: This is guaranteed way to blow account
❌ Bad: Lost 2% → Double position size to “get it back”✅ Good: Stick to plan, take a breakWhy: Emotional trading = more losses
❌ Bad: Max leverage (1:500, 1:1000)✅ Good: Use 1:100 or lessWhy: High leverage = small moves wipe you out

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Risk Calculator

Want to calculate manually? Formula: 
Risk Amount = Account Balance × Risk %
Lot Size = Risk Amount / (SL Pips × Pip Value)
Example:
  • Account: $10,000
  • Risk: 2%
  • SL: 30 pips
  • Pip Value (EURUSD): $10/lot
  • Lot Size = (10,000×0.02)/(30×10,000 × 0.02) / (30 × 10) = 200/200 / 300 = 0.067 lots
Or just use TradeWzrd Risk % mode — we do the math for you!

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Next Steps

Terminal Settings

Set default risk % and lot sizes

Signal Format

See all risk parameter examples
Questions? Check FAQ or email [email protected]