Logical Risk Management

I’ve been trading forex for about sixteen years now. Over that time I’ve tried just about everything like most people probably have. Different systems, indicators, price action approaches, discretionary trading, mechanical ideas. After enough years you end up hearing and seeing a lot of different opinions on how this should be done.

One thing I never really bothered with until recently was prop firms. Mostly because of the time limits they used to put on the challenge phases. As someone who trades more on a swing basis, that just never really fit the way I trade. I’m not interested in forcing trades just to meet some deadline.

After noticing that many of them removed the time limit for the challenge phase, I finally decided to give it a try.

I’m currently in phase 2 of FTMO 200k challenge and figured I’d document the process a bit.
The only small difference from a typical trading journal is that I won’t really be focusing on technical analysis.
I would like to show that risk management is just as, if not more important than technical analysis itself.

Technical trading is very personal. Everyone eventually ends up with something that fits their own personality and way of looking at the market. There are already plenty of good systems out there and I’m not here to add another one.

What I don’t see discussed nearly as much is risk management.

I want this journal to answer this thesis: Given a marginal win-rate in the Forex market, can you still be profitable if your risk is disciplined?

In my opinion that part should actually be a lot more consistent across traders who manage to stay around for a long time. Entries can differ. Systems can differ. But how you manage risk tends to be what keeps people in the game.

So this thread will mostly focus on that side of things.
A bit about how I trade.

 

1. I trade FX only and most of my attention is on EURUSD. I’ve traded other pairs over the years but these days I prefer to keep things simple.
2. I’m mainly a swing trader. Sometimes a trade might only last a few hours but more often they run into the next day or sometimes a few days depending on how things develop. I’m not a very high frequency trader either. On average I probably take around 20 to 25 trades a month.
3. I keep track of data of my past trades meticulously.
4. Every trade I take has a stop loss and take profit set from the start. I generally look for at least around 1.8R on a trade.
5. For this challenge the starting balance is 200k. I define 1R as 2 percent of the starting balance and the maximum risk per trade idea is 1 percent.
6. One thing I tend to do is build positions gradually. If a trade moves in my favor and I’m able to protect the initial position, I may add another trade to the same idea. The key point is that the overall risk stays controlled.
7. I’ll probably post some screen recordings of trade ideas and how I manage them once they’re open. I won’t get too deep into the technical side of why I entered. The focus will mainly be on how the risk is structured and how the position is managed once it’s live.
8. I usually do have trades going on every week but there could be some weeks where I won't have a setup or trade.
9. Mostly this is just to keep a record of the process while going through phase 2. If anyone finds it useful or wants to follow along, feel free.

We’ll see how it goes.

**Edit:** Thank you for the DMs, everybody, and a few of you asked for my Win Rate for Phase 1 and I will post it below.

1. Phase 1: June 2025 - Feb 2026
   1. 188 Trades, 42.5% WR - 80W, 108L

   
   
   

Win Rate Statistics (Phase 1):

1) PLANNING - Buy Limit LONG EUR/USD @ 0.66 lots. Entry: 1.17050, Initial SL: 1.16450, Initial TP: 1.19050

Hey everybody.

We got a gap down as expected and I have made some changes to my initial plan in the post above.
I am still going to place this Buy Limit, and have already done so - but have made a few changes in terms of lot size and SL.

1. 
   

   INITIATED - Buy Limit LONG EUR/USD @ 0.25 lots. Entry: 1.17050, Initial SL: 1.16250, Initial TP: 1.19050 - R:R - 2.50

I will update accordingly, if/when the Buy Limit gets filled.

ACTIVE:

1) T2026-B013-001 - Buy Limit LONG EUR/USD @ 0.25 lots. Entry: 1.17050, Initial SL: 1.16250, Initial TP: 1.19050, Variable SL: 1.16250, Variable TP: 1.19050, Commission: -1.25 R:R: 2.50

Hey everybody,

Just a quick update - our Buy Limit has been filled right at our Buy Limit Price at 1.1705. We are currently in a slight profit but as we are swing trading - it is really meaningless at this point.

Until market structure allows us to adjust this trade's parameters OR allows us to add additional longs, there isn't anything to manage at this point in regards to the active trade. Until then, we will just sit tight and see what the market gives us.

CLOSED

1. T2026-B013-001, LONG EUR/USD @ 0.25 lots, Entry Price: 1.17050, SL: 1.16250, TP: 1.19050, Close Price: 1.16593
   1. Commission: $-1.25, Swap: $-2.85

   
   
   
   
   

2. Planned RR: 2.50
3. Planned Risk: 0.050R
4. Planned Reward: 0.125R
5. Realized: -0.030R

Current Phase 2 Statistics:

1. 1W/4L, 20.0%
2. $199,405.40 (-0.30%)

Hey everyone,

Just wanted to give a quick update.

I saw market break our Daily support level and decided to manually exit at 1.16593.

We took a small loss, but it was good that we recognized to cut our losses as market continued to drop another 60 or so pips after that.

Overall, despite the small loss, I still believe that at the time, the risk was worth taking - we had technical context and attractive R:R. Unfortunately, it doesn't always work out.

I will make another update when I see another setup!

Hey everyone,

Markets are moving fast. I thought I was going to have at least another day before I make any decisions but with how it is moving, I figured it's best to get the orders into MT4 first.

Just a brief note technically - we are just looking to join in with Bearish trend on the Daily chart. As such, I've determined three levels for Sell Limits.

ORDERS:

1. #001 - Sell Limit SHORT EUR/USD @ 0.14 lots. Entry: 1.17100, SL: 1.18400, TP: 1.14400 R:R 2.08 - RISK ALLOCATION 23%

2. #002 - Sell Limit SHORT EUR/USD @ 0.24 lots. Entry: 1.17350, SL: 1.18400, TP: 1.14400 R:R 2.81 - RISK ALLOCATION 32%

3. #003 - Sell Limit SHORT EUR/USD @ 0.45 lots. Entry: 1.17600, SL: 1.18400, TP: 1.14400 R:R 4.00 - RISK ALLOCATION 45%

Total R:R: 3.18

We are exposing potentially up to 0.199R ($794.00) for 0.63R ($2,526.00).

For now, there is nothing to do but wait. We already have our orders in, so hopefully they all get filled!

Let's see what happens...

Hey Everyone,

Just an end-of-week update..

Our most recent orders (post above) did not get filled. Price pretty much stayed stagnant and didn't make new lows. Appears to be rebounding now and our Sell Limit orders are still valid. As such, I will keep them over the weekend. We are still far away from any of the Sell Limit(s), so I don't see much risk holding onto these orders over the weekend - especially in a Bear trend.

Below is screenshot of this week's stats:

1. 0W/1L, Net Profit: -$118.35, Net Realized R: -0.03R

ORDERS (Still valid - holding over weekend):

1. #001 - Sell Limit SHORT EUR/USD @ 0.14 lots. Entry: 1.17100, SL: 1.18400, TP: 1.14400 R:R 2.08 - RISK ALLOCATION 23%

2. #002 - Sell Limit SHORT EUR/USD @ 0.24 lots. Entry: 1.17350, SL: 1.18400, TP: 1.14400 R:R 2.81 - RISK ALLOCATION 32%

3. #003 - Sell Limit SHORT EUR/USD @ 0.45 lots. Entry: 1.17600, SL: 1.18400, TP: 1.14400 R:R 4.00 - RISK ALLOCATION 45%

Total R:R: 3.18

We are exposing potentially up to 0.199R ($794.00) for 0.63R ($2,526.00).

what your rule for risk managment? how much do you risk per trade? learning from other experiences.

Hey!

Thank you for your question.

I risk a maximum of 1% per trade idea, which I refer to as 0.5R. HOWEVER,I usually max out at around 0.35R, which is 0.70% per trade idea.

1% per trade idea is my hard cap, but I usually go with 0.70% max.

For the current example, we currently have three orders that we are holding OTW.

We are risking 0.198R, which is about 0.40% for the three positions in total. It may seem little, but once the positions/market start going our way, we will start protecting and pyramiding - which is we still maintain an exposed risk of around 0.40% total, but we are now targeting probably 2%, or 3% if we hit TP.

Hope this helps! Feel free to ask anymore questions that you may have. I am really trying to hone in and show people that proper risk management along with good technical swing analysis, can make you money - which is my thesis for my first post.

Hey Everyone,

Just a quick update.

We haven't done anything since last week (March 3). That's swing trading for ya. There weren't many opportunities and what we thought was correct. Market has made a slight new low but has not had any further continuation. Patience is required for swing trading, and we will continue to exert this patience until market has reached a price where odds are in our favor.

With the new low, we have had to delete the Sell Limits placed last week before the weekend and make a slight adjustment. Our exposure remains the same, which is 0.199R. Our R:R has slightly gone down because of the new lows, but nevertheless, the Sell Limits are still very attractive at its respective fill price. These are the new orders:

1. Sell Limit SHORT EUR/USD @ 0.14 lots. Entry: 1.17000, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 1.86, Risk Allocation: 25%
2. Sell Limit SHORT EUR/USD @ 0.20 lots. Entry: 1.17200, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 2.33, Risk Allocation: 30%
3. Sell Limit SHORT EUR/USD @ 0.40 lots. Entry: 1.17500, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 3.44, Risk Allocation: 45%
   1. Total R:R: 2.72. Total Exposure: 0.199R ($796.00). Planned Reward: 0.541R ($2,164.00)

Let's keep patient. Market appears to be starting retracement now and hopefully our order(s) will get filled in time!

Hey Brandon,

Great post!

Nice to see someone that gets this. Sadly most inexperienced traders' of risk management doesn't go beyond risking a % of their account via a stop loss.

This realization was the turning point for me, I call it "managing the downside" and it's the most important aspect of trading upon which everything else (style, identity, process, framework etc) is built. When I finally got it, even random coin flip entries became profitable, i.e. strategies don't matter.

Thank you so much for your feedback, CoffeeFreak!

I agree - most inexperienced traders focus on technicals, indicators, EA, or incorrectly manage their risk, and I want to show the opposite of that with this thread.

There is NO system out there that is the "golden ticket". As Mark Douglas says, once you have developed your system and trust it, then there is no need to question it. The only thing within our control is our risk management and not the market. No matter how great technicals look or what your system says, you will NEVER know if that trade will win or not - it just isn't possible. Just trust your system, trust your numbers, and most importantly, correctly risk manage your account.

My thinking is the same. I am just "managing the downside", as I know a nice winner will come sooner or later. As long as I keep my losers small and manage it, it is just a matter of time before the account hits new equity high.

You totally get the point. No matter how great your system is, it basically is just a random coin flip. And you can even use a coin flip as your system if you so wish - because the reality is that no one knows what the next trade is. We just play the law of large numbers. Strategies (vaguely speaking) do not matter.

Hey Everyone,

Just a quick update.

I have deleted one of the Sell Limits and left two remaining as I placed a SPOT trade. As such, I have decided to remove the 1.17500 Sell Limit to reduce exposure. Note that the current active trade has a different SL than the rest of the Sell Limit orders currently pending.

ACTIVE:

1. T2026-B014-001 - Spot SHORT EUR/USD @ 0.60 lots. Entry: 1.16228, Initial SL: 1.16850, Initial TP: 1.14400. R:R: 2.94, Risk Allocation: 46%

PENDING:

1. Sell Limit SHORT EUR/USD @ 0.14 lots. Entry: 1.17000, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 1.86, Risk Allocation: 24%
2. Sell Limit SHORT EUR/USD @ 0.20 lots. Entry: 1.17200, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 2.33, Risk Allocation: 30%

Let's see what happens. Currently, we are at a slight loss for the active trade. We will continue to monitor the market and make applicable adjustments. IF market starts going our way, I will cancel the pending orders and find applicable levels to enter additional(s). IF market does not go our way, we reserve the right to manually exit or have T2026-B014-001 hit SL. Depending on how fast the action is to the upside, we may or may not delete pending Sell Limits.

I will keep you all updated. As the trade progresses, I will probably make a quick video as well - but currently, there isn't much to talk about.

Let's see how this plays out and we will stick to our plan!

The key takeaway isn’t the win rate itself it’s that with strict risk management, even a marginal win rate can still be profitable. Each trade risked 1% max, positions were added carefully, and losses were controlled.
Phase 2 is all about continuing that discipline and documenting how risk management drives results.

Thank you for your input.

I completely agree! Attitude and Risk Management is most important of all in FX trading - regardless if you are a Swing trader or Day trader.

I will continue to document and journal my progress and show you all how it goes!

Another great post, Brandon!

It's the trader's job to manage the downside (cut losers), it's the market's job to manage the upside (let winners run)

My turning point didn't come until after I adopted the above attitude, most struggling traders do the opposite. It was then that I dedicated all my time to becoming better and better at managing the downside. The game I played to improve my skills (what I recommend everybody should try) was manually backtesting random coin flip entries with 1:1 SL/TP ratio. The goal was to profit off a breakeven system (with "no edge") by recognizing losing trades ASAP and cutting them before they hit the SL to minimize losses while leaving winning trades alone until they hit the TP. After a while, I got good at recognizing when the market shifted against my position, which simplified trading, i.e. cut losers and let winners run (no TP) via ignoring open P&L and staying in the trade until the market shifts against me.

I didn't realize it then but this became the foundation for my process and identity as an independent trader / investor (Like you: 18+ years trading, 5+ years full time).

That’s a sharp journal entry, and I think you’re hitting the nerve of what separates survivors from casualties in this game. A 42.5% win rate across nearly 200 trades is the perfect case study: it proves profitability isn’t about being right most of the time, it’s about structuring risk so that when you are right, it pays, and when you’re wrong, it doesn’t cripple you.

Most traders obsess over entries, indicators, or the latest system, but the graveyard is full of people who had great entries and no discipline. What you’re showing here is that risk management is the universal edge- systems differ, personalities differ, but the math of controlled risk is what keeps accounts alive.

Defining 1R as 2% of balance and capping risk at 1% per idea is exactly the kind of structure that scales. The gradual position building is another smart layer- it lets you press an advantage without ever letting greed hijack the plan. That’s the kind of nuance that newer traders miss, and it’s why documenting this process is valuable.

If you pass Phase 2 with this approach, it’s going to be one of the strongest arguments out there that disciplined risk management beats chasing high win rates. Keep posting the breakdowns and equity snapshots- those are the receipts that actually teach. You’re not just trading the challenge, you’re showing the blueprint for longevity.

This is the kind of journal that cuts through the noise. Entries are personal, but risk is universal. And you’re proving it.

Thank you so much for your input. I really take it to heart and appreciate the feedback! Cheers.

Hey Everyone,

I made some adjustments - so it warrants an update.

I have just protected T2026-B014-001 (placed SL to 1.1618), as market structure has allowed me to do so at this point. It is safe to say that if market reverses and hits T2026-B014-001's protected SL, we can expect deeper retracement to the upside.

Since T2026-B014-001 has been protected, it has freed up some risk and I have added an additional SPOT Short. As such, I have cancelled one of the Sell Limit orders I posted above.

ACTIVE:

1. T2026-B014-001 - Spot SHORT EUR/USD @ 0.60 lots. Entry: 1.16228, SL: 1.16180, Initial TP: 1.14400, R:R: PROTECTED, Risk Allocation: 0%
2. T2026-B014-002 - Spot SHORT EUR/USD @ 0.73 lots. Entry: 1.16000, Initial SL: 1.16550, Initial TP: 1.14400, R:R: 2.91, Risk Allocation: 63%

PENDING:

1. Sell Limit SHORT EUR/USD @ 0.20 lots. Entry: 1.17200, Initial SL: 1.18400, Initial TP: 1.14400, R:R: 2.33, Risk Allocation: 37%

We are not out of the woods yet. Yes, market has allowed T2026-B014-001 to be protected, but at this moment in time, I still do not see the decisive break we need to say we are continuing down. As such, we will continue to be vigilant, and adjust/manage our risk as needed.

Our plan remains the same. IF market continues to go our way, I will cancel the last pending order and find applicable levels to enter additional(s). IF market does not go our way, we no longer have to manage T2026-B014-001, and can allow it to be stopped out at protection. The only thing to manage currently is T2026-B014-002, and we continue to reserve the right to manually exit or have it hit SL should market start turning against us. Again, depending on how fast the action is to the upside, we may or may not delete the last remaining Sell Limit.

SUMMARY:

We currently have a live exposure of ~0.100R (-$375.18), with total exposure at ~0.160R (-$615.18).

We currently have a live target of ~0.566R (+$2,262.32), with total possible target at ~0.706R (+$2,824.80).

All possible scenarios have been considered and will continue to be evaluated.

Hey Everyone,

Market has gone our way and we have made some big changes.

1) SL for T2026-B014-002 is now protected and changed to 1.1600.
2) TP for T2026-B014-001 and T2026-B014-002 has been tightened to 1.14800.
3) Sell Limit Order for 1.17200 has now been cancelled.
4) Added a new Sell Limit Order

ACTIVE:

1. T2026-B014-001 - Spot SHORT EUR/USD @ 0.60 lots. Entry: 1.16228, SL: 1.16180, Initial TP: 1.14800, R:R: PROTECTED, Risk Allocation: 0%
2. T2026-B014-002 - Spot SHORT EUR/USD @ 0.73 lots. Entry: 1.16000, SL: 1.1600, Initial TP: 1.14800, R:R: PROTECTED, Risk Allocation: 0%

PENDING:

1. Sell Limit SHORT EUR/USD @ 1.50 lots. Entry: 1.15750, Initial SL: 1.16150, Initial TP: 1.14800, Risk Allocation: 100%

SUMMARY:

Market action has been quick, and dropped quicker than I expected. Market has broken an important intraday level at 1.1560, and as such, I believe we are looking favorable at this moment in time. We no longer have any exposed risk at all, and will continue to monitor any intraday retracements that may happen to add additional(s). For now, the new Sell Limit stated above holds. The decision to tighten the TP did not come lightly. I hate adjusting TPs and usually stick to the original TP that is set but given the current political situation, and the fact that Daily Oversold is below our original TP level of 1.14400, I have decided to tighten the TP for all trades and future Sell Limit Orders. There is no point to carry the extra risk for a mere forty pips over the weekend with the current uncertainty.

We currently have a live exposure of +0.016R (+$64.97) +/- swaps, commission, and total exposure at -0.134R (-$535.03).

We currently have a live target of +0.442R (+$1,768.97) +/- swaps, commission, and total possible target at +0.798R (+$3,193.97).

We are currently risk-free, with possible exposure if Sell Limit gets filled. All possible scenarios have been considered and will continue to be evaluated.