Why Margin and Risk Management Are Your First Trading Lessons

Margin is the portion of your account set aside as collateral to open a leveraged position. It is not a cost, but a good-faith deposit that gets returned when you close the trade. Running out of margin triggers a margin call, forcing positions to close automatically.

Risk management starts with position sizing. A common beginner rule is risking no more than 1-2% of account equity per trade, regardless of how confident you feel about a setup.

Stop-loss orders are the simplest risk tool available. Setting one before entering a trade removes emotional decision-making exactly when it matters most—during sudden volatility.