Plain-language definitions of the risk terms that matter most to how long you last as a trader.
Sizing
| Term | What it means |
|---|
| Position size | How much you commit to a single trade. See risk management for beginners. |
| Stake | The amount committed to a specific trade. |
| Exposure | How much of your balance is committed at once. |
| Overleveraging | Committing more than your balance can comfortably absorb. |
Outcomes over time
| Term | What it means |
|---|
| Drawdown | A fall from a previous peak in your balance. |
| Losing run | A sequence of losing trades. Normal, and survivable with good sizing. |
| Win rate | The share of trades that won. Less important than sizing. |
| Consistency | Producing similar decisions across many trades, regardless of individual results. |
Habits
| Term | What it means |
|---|
| Chasing losses | Increasing size after a loss to recover quickly. The most damaging common habit. |
| Trading plan | Rules decided in advance about size, markets and when to stop. |
| Trading journal | A record of trades and reasoning. See keeping a trading journal. |
Putting it into practice
Definitions stick faster when you see them in use. Open a demo account — virtual funds, no deposit — and these terms stop being abstract within minutes.