Glossary · Risk & money management
Risk of ruin
The probability of losing so much of an account that recovery becomes impractical. It rises quickly with larger risk per trade.
Related terms
Risk per trade
The share of your account you lose if a trade hits its stop loss.…
Drawdown
The fall from an account’s peak to its lowest point before a new…
Martingale
Doubling position size after each loss to recover it with one win.…
Backtesting
Testing a strategy on historical data to see how it would have…
Black swan
A rare, unpredictable event with extreme market impact, such as…
Correlation
A measure from −1 to +1 of how closely two pairs move together.…