Everything in this level comes down to a handful of numbers and two or three sentences. This capstone is where you write them. A trading risk management plan is not a document to admire, it is a short set of commitments made while you are calm, so that the version of you who is losing does not get a vote.
01 The exercise
Write six lines. Put them somewhere you will see them while trading, not in a folder. Paper next to the monitor beats a beautifully formatted file you never open. It should take fifteen minutes, and you should expect to revise it after a month of real use.
02 Choosing each number
Risk per trade. Between 0.5 and 2 percent, lower while you are learning. Convert it to actual money now, because "1 percent" is abstract at 9:47 and "50 US dollars" is not.
Daily loss limit. Two or three times your per-trade risk is a common choice. The point is that it is reached after a normal bad run rather than a catastrophe, so it stops the day before the day becomes a story.
Max open positions and currency cap. From the correlation lesson: several positions sharing a currency are one bet. Three trades at 1 percent that are all short the US dollar is a 3 percent position, so cap total exposure per currency at your normal per-trade risk unless you are deliberately sizing up.
Pause after a loss. Ten or fifteen minutes. Short enough to be realistic, long enough for urgency to fall below the level where it places orders.
Your stop-trading trigger. This one is written in words, not numbers, and it is the most personal line on the card. It names the state in which you must not trade. Something like: "I stop when I notice I want a trade rather than that I have found one," or "I stop after two rule breaks in a session, whatever the balance says."
03 Making it binding
A rule you can quietly ignore is a wish. Give each line something that enforces it: the per-trade number lives in your position size calculator, the daily limit is written where you can see it, the pause is a phone timer, and the stop-trading trigger is checked in your journal at the end of each session. Then review the card monthly, and change it deliberately rather than mid-trade.
A completed card for a 5,000 US dollar account. Risk per trade: 1 percent, which is 50 US dollars. Daily loss limit: 3 percent, which is 150 US dollars, or three losing trades, then the platform closes. Max open positions: two. Currency exposure cap: 1 percent total on any single currency, so two US dollar trades are 0.5 percent each. Pause after a loss: 15 minutes. I stop trading when: I have taken a trade I cannot justify in one written sentence. Six lines, all enforceable, none requiring willpower in the moment.
Writing aspirational numbers rather than honest ones. A card promising 0.25 percent risk and four hours of pre-market analysis will be abandoned in a week, and abandoning it teaches you that your rules are optional, which is far more expensive than a slightly loose rule you actually keep. Write what you will genuinely do, then tighten it once it holds.
- Why convert your risk percentage into a money figure on the card?
- Why is a currency exposure cap needed when you already have a per-trade limit?
- What makes an aspirational rule worse than a modest one?
Show answers
1) Because a percentage is abstract under pressure and a figure in your own currency is not. 2) Because correlated positions sharing a currency behave as a single larger trade. 3) Because breaking it teaches you that your rules are negotiable, which costs more than the looser rule would have.
- Six lines, written calmly, kept visible: risk per trade, daily limit, open positions, currency cap, pause, stop trigger.
- Convert percentages into real money so the numbers mean something in the moment.
- Attach an enforcement mechanism to each line rather than relying on memory.
- Write rules you will actually keep, then tighten them once they hold.
Risk per trade in percent and in money, a daily loss limit, a maximum number of open positions, a cap on exposure to any single currency, a mandatory pause after a loss, and a written trigger that ends your session regardless of the balance.
Review monthly and change deliberately, between sessions. Rules edited during a trade are not rules. If a limit is repeatedly reached, that is information worth acting on, but act on it while flat.
They enforce their own version, usually a maximum drawdown of around 10 percent and a daily limit near 5 percent. Having your own tighter card is the practical way to stay inside theirs, since your limits are hit first and act as a warning.
Further reading: FCA permanent restrictions on CFDs sold to retail clients, the regulator's own version of a risk card, including leverage caps and margin close-out.
Put line one to work in the free Position Size Calculator