Hey traders,
Trading isn’t about being right.
It’s about staying alive.
Every trader loves the hot setup. The perfect ticker. The next big win.
That’s what draws you — the adrenaline rush, the charts lighting up, the dream of catching that one trade that changes everything.
I used to chase that feeling every single day. I’d wake up early, scanning for the next runner, thinking if I could just find the one — I’d finally make it.
Sometimes I did.
I’d nail the entry, ride the momentum, and watch my P&L explode.
It felt incredible, like I’d cracked the code.
But then I’d slip. One bad trade, one greedy hold, one stubborn mistake, and all those gains were gone.
It wasn’t the market’s fault, and it wasn’t bad luck. It was me — chasing setups instead of managing risk.
That’s when I learned the truth:
Risk management isn’t optional — it’s survival.
Why Risk Comes First
Every trade carries risk. That’s part of the job.
Early on, I tried to avoid losses. I held bags, hoping for a bounce. That only made the hole deeper.
Once I accepted losses as normal, everything changed. They stopped feeling like failure. Losses were just the cost of doing business.
Confidence doesn’t come from being perfect. It comes from knowing your downside is under control.
When you fear losing money, emotions take over. You miss entries, hold losers, and blow up accounts.
But managing risk with discipline and planning fixes that.
And it starts with a simple formula that doesn’t rely on guessing or emotion.
It’s just math.
Risk Management Made Simple
Before I enter a trade, I know my stop. I never risk more than 1%–2% of my account on a single position.
Step 1: Define the Max $ Risk per trade.
Say my account is $50,000. I’m only willing to risk 1% of my account ($500).
Step 2: Find entry and stop levels.
I want to buy a stock at $10.00 with a stop-loss at $9.50. That’s $0.50 of risk per share.
Step 3: Calculate position size.
Divide the total dollar risk ($500) by the risk per share ($0.50):
So my position is 1,000 shares. No more, no less.
Step 4: Let the numbers do the work.
If the stock stops me out, I lose $500 (1% of my account).
If the stock runs to $11.50, I make $1.50 per share = $1,500.
500 ÷ ($10.00 – $9.50) = 1,000 shares
That’s it. No guessing.
This is another way to visualize it:
To see how I apply these exact sizing rules in real scenarios (and how I pick setups), check out 6 Lessons From Jack’s Live Webinar.
What Comes Next
This is the foundation. But risk management doesn’t stop with numbers.
In my next note, I’ll break down how I protect profits — locking gains before they slip away.
Plus, I’ll show you how I manage risk across an entire watchlist, balancing exposure, volatility, and timing.
Because surviving one trade is easy.
Surviving a thousand takes a system.
Stay tuned.
Welcome to the game,
Jack Kellogg
