---
title: 'Risk Management Basics #trading #smartmoney'
source: 'https://youtube.com/watch?v=Ir0Aw9mURHA'
video_id: 'Ir0Aw9mURHA'
date: 2026-08-04
duration_sec: 80
---

# Risk Management Basics #trading #smartmoney

> Source: [Risk Management Basics #trading #smartmoney](https://youtube.com/watch?v=Ir0Aw9mURHA)

## Summary

The video explains the critical importance of risk management in trading, using a table that shows how consecutive stop-losses at various risk levels can wipe out a deposit. It emphasizes that using a small risk percentage (like 1%) per trade provides a huge margin for error and protects both financial and emotional well-being, while risking 100% (no stop-loss) guarantees total loss on a single bad trade.

### Key Points

- **Risk and Consecutive Losses Table** [00:02] — A table shows how many consecutive stop-losses are needed to lose the entire deposit at different risk levels, calculated using the compound interest formula.
- **100% Risk Equals No Stop-Loss** [00:14] — Trading with 100% risk means no stop-loss; one wrong trade results in losing the entire deposit, regardless of previous profitable trades.
- **Optimal Risk for Margin of Error** [00:27] — The first two columns represent optimal risk levels because they leave a huge margin for error, preventing losing trades from critically impacting financial and emotional well-being.
- **1% Risk Example** [00:56] — With 1% risk per trade, you would need 460 consecutive losing trades to reduce the deposit from 100% to 1%, and 70 consecutive losses to lose half the deposit.
- **Realistic Loss Scenario** [01:11] — It's nearly impossible to lose even half your deposit if you open trades based on any kind of analysis, given the low risk per trade.

### Conclusion

The key takeaway is that disciplined risk management, specifically risking a small percentage per trade, is essential for long-term trading survival and success.

## Transcript

Look at this table.  This shows how many consecutive stop-losses you need to get with a certain risk to completely lose your deposit. The calculations were carried out using the compound
The calculations were carried out using the compound interest formula.  100% risk is trading without stop loss.  One wrong trade will result in the loss of your entire deposit.  And here it will no longer matter how many profitable trades you have opened
before.  you will still lose 100%. Now look at the first two columns. This is the optimal risk to take when entering positions because it leaves a huge margin for error. Losing trades won't have a critical
impact on your financial and emotional well-being, which will help you achieve positive results over time or at least remain break-even.  If you open trades with a 1% risk, you will
open trades with a 1% risk, you will need 460 losing trades in a row to get 1% of your 100% deposit down to just 1%.  And to lose half, you will need to open 70 losing trades in a row.  I can't
imagine a scenario where you could lose even half of your deposit if you open trades based on any kind of analysis.  y