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Education · Risk Management · Chapter 2 of 2

How to minimize losses

7 min02 / 02

Long-term trading isn't about winning every time. It's about keeping losses small when you're wrong and letting profits run when you're right. The three pillars below are how that's done in practice.

Position sizing, the 1–2% rule

Never risk more than 1–2% of your capital on a single trade. So if your account is IDR 100M and your rule is 1%, the maximum loss on any trade is IDR 1M, no matter how good the setup looks.

TOTAL ACCOUNT98% safe2% at riskThis trade only
From your total capital, only 1–2% is 'on the table' per trade. The remaining 98–99% waits safely for the next opportunity.

With this rule you can be wrong 10 times in a row and still have more than 80% of your capital. Without it, a single bad trade can erase months of progress.

Sensible stop-loss

A stop-loss isn't just a 'loss limit', it's the point where your analysis is proven wrong. Place it at a level that makes technical sense: below support, above resistance, or outside the normal range of movement.

Take-Profit (TP)EntryStop-Loss (SL)
Entry, stop-loss (SL), and take-profit (TP) are set before entering a position, not after price moves.

Moving a stop-loss because 'price is about to hit it' is the habit that destroys accounts. When your stop gets hit, the market is telling you your analysis was wrong, not that the market is wrong.

Risk/reward ratio

For every IDR 1 you're willing to lose, target at least IDR 2 in potential gain (a 1:2 ratio). With this ratio you can be right only 40% of the time and still be profitable long-term.

RISK (stop-loss)1×REWARD (take-profit)3×Ratio 1:3, win 40% of trades and still profit
A 1:2 ratio means the profit target is twice as far as the stop-loss. 1:3 is even better.

Log every trade and the reasoning behind it. A trading journal is the cheapest, most powerful tool for improving over time.

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