Every trader loses. The traders who last are not the ones who never lose — they are the ones whose losses are small and planned. On fast markets like Deriv's synthetic indices, risk management is not a nice extra. It is the whole game.
Rule 1: Risk 1–2% per trade
Decide the maximum percentage of your balance you will lose if a trade hits its stop loss. We recommend 1% for beginners and never more than 2%.
On a $200 account, 1% is $2. That feels small — and that is the point. With 1% risk, ten losses in a row still leave you with about 90% of your account. With 10% risk, the same streak can leave you with around a third.
Rule 2: Size the position from the stop loss
Most beginners choose a lot size first and then place the stop wherever it fits. Reverse it:
- Find the logical stop-loss level on the chart (beyond support, resistance or the last swing).
- Measure the distance from entry to stop.
- Calculate the lot size so that distance equals your fixed risk in dollars.
In MT5 you can check how much a price move is worth for a given volume in the symbol's Specification, or simply place the trade on demo with your planned stop and read the potential loss. Our risk calculator shows your dollar risk and target instantly.
Rule 3: Always use a stop loss
Synthetic indices can move a long way in seconds, and Boom and Crash spikes can be violent. A trade without a stop loss is a trade with unlimited downside. Place the stop when you open the trade, not "later".
Rule 4: Aim for a reward at least as big as the risk
A risk-to-reward ratio of 1:2 means you aim to make $2 for every $1 risked. With 1:2, you can be right on only 40% of trades and still grow the account over time — before costs. Do not move your target closer just to "lock something in" while leaving the stop far away.
Rule 5: Set a daily loss limit
Pick a limit — for example, three losing trades or 3% of the balance in a day — and stop trading when you hit it. Most account blow-ups do not come from one bad trade; they come from revenge trading after a bad trade.
Rule 6: Plan for losing streaks
Even a good strategy can lose five or six times in a row. Ask yourself before every session: "If I lose my next six trades, how much will my account be down?" If the answer scares you, your risk is too high.
A simple pre-trade checklist
- Is this setup in my written plan?
- Where is my stop loss, and why there?
- Is my lot size calculated from 1–2% risk?
- Is my target at least 1:1.5 or 1:2?
- Have I hit my daily loss limit?
Write the answers in your trading journal. Over a month, the journal will show you exactly where your money goes.
Frequently Asked Questions
Risk warning: trading derivatives carries a high level of risk. This article is for educational purposes only and is not financial advice.
