Position sizing, stop-losses, risk-reward ratios and daily loss limits: the rules that separate surviving traders from blown accounts.
Every successful day trader has one thing in common: they survive long enough to let edge play out. Survival is not about picking winners; it is about controlling losses.
Rule 1: never risk more than 1-2% of your capital on a single trade. Rule 2: set your stop-loss before you set your target. Rule 3: only take trades with a minimum 1:2 risk-reward ratio. Rule 4: stop trading after two consecutive losses. Rule 5: cap daily losses at 3-5% of capital.
This playbook also covers how to journal trades, review performance weekly, and identify whether a losing streak is bad luck or a broken strategy.
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