Courses / Candlestick Patterns Masterclass

Risk Management with Candlestick Setups

Turn patterns into a plan: position size, stop, target and expectancy.

Risk a small fixed percentage of your account per trade, for example 1%. Place the stop where the pattern is invalidated, then size the position so the loss equals your risk.

Aim for at least 2R. With a 40% win rate and 2R winners, you can still be profitable. Without a defined stop, patterns are just guesses.

Stop trading for the day after a set number of losses to protect capital and discipline.

Key takeaways

• Risk a fixed small percent per trade
• Stop at the invalidation point, size from there
• Daily loss limit protects discipline

Quiz

• Position size is calculated from: Answer: Risk amount and stop distance. Size = risk amount divided by stop distance.
• With 2R winners, break-even win rate is about: Answer: 34%. With 2R you need to win about one in three.
• A daily loss limit helps to: Answer: Protect capital and discipline. It stops emotional trading.

Educational content, not financial advice.