4) Trading Strategy
Risk management isn't about avoiding risk — it's about managing risk so you survive long enough to win. The richest traders in the world aren't those who win most often, but those who control their losses best.
Risk management in stocks is a set of strategies to protect capital and limit losses. It includes position sizing, stop loss, diversification, and risk-reward ratio management so that in the long run, total profit always exceeds total losses.
Risk management is like a seatbelt in a race car. The seatbelt doesn't make you win the race — driving skill and a good engine do. But without a seatbelt, one small crash can end your racing career forever. In trading, analytical skill is your engine, but risk management is the seatbelt that ensures you can still race tomorrow even if you crash today.
A trader has Rp 100 million in capital. With good risk management, they only risk 1% per trade (Rp 1 million). This means they can be wrong 20 consecutive times and still have 80% of their capital. Compare that with a trader risking 10% per trade — just 7 consecutive losses to lose half their capital. In Indonesia's volatile market, 7 consecutive losses is very possible.
After understanding this concept, apply it in tools so decisions become more objective and measurable.
Open Risk Management CalculatorWhat win rate is enough for consistent profit?
With a 1:2 risk-reward ratio (risk Rp 1, target Rp 2), you only need a 40% win rate to profit! Out of 10 trades: 4 wins x Rp 2 = Rp 8, 6 losses x Rp 1 = Rp 6. Net profit Rp 2. So you can be wrong more often than right and still profit.
Can trading without a stop loss be successful?
Highly not recommended. Even long-term investors have a 'mental stop loss'. Trading without a stop loss = driving a car without brakes. The road might be smooth 99% of the time, but the 1% when you need brakes and don't have them, the result can be fatal.
