Level 7 · Lesson 15 of 16 · 6 min read
Building Your Risk Management Plan
A written document with specific numbers. Not rules in your head that bend under pressure.
Researched and written by Laurent The Template
Fill in your numbers. These are YOUR rules, based on YOUR account size, risk tolerance, and strategy:
Risk Management Plan
Max risk per trade: ___% (recommended: 1-2%)
Max daily loss: ___% (recommended: 3%)
Max weekly loss: ___% (recommended: 5%)
Max monthly loss: ___% (recommended: 10%)
Max simultaneous open positions: ___ (recommended: 3-5)
Max correlated positions: ___ (recommended: 2 in the same direction)
Minimum risk-reward ratio: 1:___ (recommended: 1:1.5 or better)
Position sizing method: Fixed percentage / ATR-based
Stop-loss method: Structural / ATR / Candle-based
Take-profit method: S/R target / Fixed RR / Trailing / Hybrid
Max risk per trade: ___% (recommended: 1-2%)
Max daily loss: ___% (recommended: 3%)
Max weekly loss: ___% (recommended: 5%)
Max monthly loss: ___% (recommended: 10%)
Max simultaneous open positions: ___ (recommended: 3-5)
Max correlated positions: ___ (recommended: 2 in the same direction)
Minimum risk-reward ratio: 1:___ (recommended: 1:1.5 or better)
Position sizing method: Fixed percentage / ATR-based
Stop-loss method: Structural / ATR / Candle-based
Take-profit method: S/R target / Fixed RR / Trailing / Hybrid
A Filled-In Example
Here is the same template completed by a trader with a $10,000 account. Your numbers will differ, but every line should be this specific:
Sample Risk Management Plan ($10,000 account)
Max risk per trade: 1% ($100)
Max daily loss: 3% ($300). Hit it and the platform closes for the day.
Max weekly loss: 5% ($500). Hit it and the week is over. Journal review before restarting.
Max simultaneous open positions: 3
Max correlated positions: 2 in the same direction, the second at half size
Minimum risk-reward ratio: 1:2
After 2 consecutive losses: stop trading for the rest of the day
Position sizing: fixed 1% via the Position Size Calculator. Stop-loss: structural (beyond S/R with a 5-10 pip buffer). Take-profit: hybrid (50% at 1:1, trail the rest).
Max risk per trade: 1% ($100)
Max daily loss: 3% ($300). Hit it and the platform closes for the day.
Max weekly loss: 5% ($500). Hit it and the week is over. Journal review before restarting.
Max simultaneous open positions: 3
Max correlated positions: 2 in the same direction, the second at half size
Minimum risk-reward ratio: 1:2
After 2 consecutive losses: stop trading for the rest of the day
Position sizing: fixed 1% via the Position Size Calculator. Stop-loss: structural (beyond S/R with a 5-10 pip buffer). Take-profit: hybrid (50% at 1:1, trail the rest).
Making It Work
A risk management plan only works if it's:
- Written: Rules in your head bend under emotional pressure. Written rules don't.
- Visible: Print it and put it where you can see it before every trade.
- Non-negotiable: When the rule says stop, you stop. No "just one more."
- Reviewed: Look at it monthly. If your strategy evolves, update the plan. But never change it mid-trade or mid-losing streak.
The test: Could you hand your risk management plan to another trader and have them follow it without asking questions? If any rule is vague or open to interpretation, make it more specific.
Key Takeaways
- • Your risk management plan must be written, specific, and non-negotiable.
- • Key elements: max risk per trade, daily/weekly limits, max positions, correlation rules, minimum RR.
- • Print it. Tape it to your desk. Refer to it before every trade.
- • Review and adjust monthly based on your trading journal data.