Why Most Traders Get Risk Management Wrong

Most retail traders think risk management is about stop-losses.

It is not.

Real risk management is about:

1. Position sizing — how much of your portfolio is at risk per trade
2. Correlation exposure — are your positions actually independent?
3. Opportunity cost — what you give up by being in a bad trade

The retail trader who wins 60% of the time but loses 2x on losses is still losing money. The professional who wins 40% of the time but keeps losses small is profitable.

This is basic math. Yet most traders ignore it.

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