Definition: The practice of controlling how much capital you expose to loss on each trade or position. Example: Risk management ensures that one bad trade cannot destroy your entire portfolio.

Definition: The process of calculating how much of an asset to buy based on your risk tolerance and stop-loss distance. Example: If you risk 2% of 10,000,your position size adjusts so that hitting the stop-loss cost sexactly200.

Definition: A predefined price level where you exit a trade to prevent further losses. Example: You buy BTC at 50,000 and set a stop-loss at48,500 to cap your downside.

Definition: The relationship between how much you risk on a trade versus how much you aim to gain. Example: A 1:3 risk/reward means you risk 100to potentially make300.

Definition: The total percentage of your capital at risk across all open positions at the same time. Example: If you have three trades each risking 2%, your portfolio heat is 6%.

Definition: The peak-to-trough decline in your account balance during a losing period. Example: A 10,000 account dropping to7,000 experiences a 30% drawdown.

Definition: A stop-loss placement method that adjusts distance based on the asset’s recent price movement range. Example: A high-volatility altcoin gets a wider stop than a stable asset like BTC.

Definition: Entering a position gradually across multiple price levels instead of all at once. Example: You buy 30% of your planned position now, and add more if price confirms your thesis.

Definition: Exiting a position in stages to lock partial profit while keeping exposure to further upside. Example: You sell 50% at your first target and let the rest run toward a higher level.

Definition: The danger of holding multiple assets that move together, amplifying losses during market-wide crashes. Example: Holding BTC, ETH, and SOL gives you 3× exposure to the same downtrend, not diversification.

Definition: Borrowed capital that multiplies both your position size and your risk. Example: Using 10× leverage on 1,000 creates a10,000 position that liquidates on a 10% adverse move.

Definition: The forced closure of a leveraged position when losses approach the borrowed amount. Example: Your 5× long position gets liquidated when BTC drops 20% because your margin is exhausted.