If you’re new to trading, especially in a prop firm environment like Funded Knight, risk management is your most valuable tool. It’s not about avoiding risk entirely — it’s about controlling it so you stay in the game long enough to grow and get funded payouts.
Let’s break it down in simple terms.
What Is Risk Management in Trading?
Risk management means deciding how much of your trading account you’re willing to risk on each trade. Instead of focusing on how much you might make, smart traders first think about how much they could lose — and set rules to limit that.
In funded trading, this matters even more because breaching risk limits can result in losing your funded account or challenge.
Key Risk Rules to Know
At Funded Knight, funded accounts come with clear risk rules designed to protect both you and the firm’s capital:
- Daily Loss Limit: You can’t lose more than a set amount in a single day. This prevents emotional overtrading and big wipeouts.
- Max Overall Loss: This is the total drawdown you can have from your starting balance before your account is breached.
- No Lot Size Limits: While you’re free to trade any lot size, it’s still your job to manage it responsibly to avoid exceeding your loss limits.
- No News Trading Restriction: You can trade during news — but you still need to manage the extra volatility and avoid oversized positions.
Simple Tips to Stay Safe:
- Never risk more than 1–2% of your account per trade.
- Use stop-loss orders to automatically cut losses.
- Avoid revenge trading after a loss. Take a break if you hit your daily limit.
- Journal every trade to track mistakes and improvements.
Final Thought
Risk management isn’t about limiting your potential — it’s about making sure you survive long enough to succeed. Follow the rules, manage your exposure, and trade smart to stay funded and earn those payouts.
Read more beginner tips at FundedKnight to sharpen your edge. ⚔️
