Jesse Livermore's 12 Rules of Risk Management

1. Never average down a losing position. Averaging down is how small losses turn into fatal ones.

2. Always use a stop-loss. A trade without a stop is a bet with no limits.

3. Cut your losses quickly. Losses should be taken immediately, without discussion or argument with yourself.

4. Let the winners run. Big money is made on a few big winners, not on many small ones.

5. Trade only when the market confirms your idea. Your opinion means nothing until the price agrees.

6. Never trade on hope. Hope is not a strategy, it's an admission that you're already wrong.

7. Risk only a small portion of your capital on each trade. Survival is more important than profit.

8. Trade with the main trend. Fighting the trend is the fastest way to ruin. 9. Sit tight when you're right. Impatience kills profits far more often than bad entries.

10. Stay out of the market when the situation is unclear. Not having a position is still a position.

11. Only increase your position size when you're already in profit. Pyramiding only works in your favor, never against you.

12. Protect your capital above all else. You won't be able to recover anything if you're completely wiped out.

Each of these rules is paid for with losses, pain, and blown accounts.