Core formula for trading risk control: Risk = Position Size × Stop Loss Distance. No matter how big the fluctuations are, you can still control the risk steadily!

Most traders mistakenly believe that 'risk is determined by price fluctuations,' falling into a cognitive fallacy—the real risk is never the amplitude of market fluctuations, but rather the size of your position, the stop loss settings, and the preset maximum loss threshold.

The core logic of trading risk control is hidden in a simple formula: Risk = Position Size × Stop Loss Distance. As long as you strictly lock each trade's risk at 1% of your account funds, no matter if the market fluctuates 2%, 5%, or even 10%, it cannot exceed your risk boundary.

The key is not 'how much the market fluctuates,' but whether you have done three things well:

How much position size to enter?

Where to precisely set the stop loss?

Is the actual risk strictly limited to within 1%?

Let me give two straightforward practical examples:

If the price fluctuates by 2%, you only need to open a position of 50% (half position), actual risk = 50% × 2% = 1%;

Even if the price fluctuates extremely by 4%, as long as you compress the position to 25% (1/4 position), the risk remains = 25% × 4% = 1%.

Market fluctuations are external variables, always uncontrollable; but risk is an internal variable, completely under your control. You cannot influence price trends, but you can firmly lock the risk within the preset framework by adjusting position sizes and clarifying stop losses—fluctuations can be infinitely amplified, but risk can always be actively compressed by you.

This is the essence of trading risk control: abandon control of the uncontrollable market, and fully master the controllable trading behavior. By safeguarding the 1% risk boundary, you can survive for a long time in the ever-changing market and steadily profit.