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The Golden Rule: The 1% Rule. The most widely accepted risk management principle is to never risk more than 1% of your total account balance on a single trade. If you have a $1,000 account, your maximum loss on any given trade should be no more than $10.

Position Sizing. Proper position sizing goes hand-in-hand with the 1% rule. Your position size should be calculated based on your stop-loss and the 1% rule — ensuring you can sustain multiple losses without your account being wiped out.

Using Stop-Loss Orders. A stop-loss order is a mandatory tool. It automatically closes your trade when the price reaches a certain level, limiting your losses. Placing a stop-loss removes emotion from the trade and protects your capital from unexpected reversals.

Setting Take-Profit Levels. Just as a stop-loss protects you from losses, a take-profit order locks in your gains. It automatically closes a trade when it reaches a predetermined profit level, helping you capture profits before the market turns against you.

What is a Candlestick? A single candlestick represents the open, high, low, and close price for a specific time frame. The body shows the range between the open and close; the wicks show the high and low. A green candle indicates the price closed higher than it opened, while a red candle means the price closed lower.

Common Patterns to Look For:

• ·Doji: A candle with a very small body and long wicks — indicates indecision and often signals a potential reversal.
• ·Hammer & Inverted Hammer: Single-candle reversal patterns. A hammer has a small body at the top and a long lower wick, showing buyers overpowered sellers.
• ·Engulfing Patterns: A two-candle pattern where the second candle's body completely engulfs the first. A bullish engulfing pattern signals a strong reversal upside.
• ·Morning & Evening Stars: Three-candle patterns signalling strong trend reversals — among the most reliable candlestick formations.

Understanding these patterns helps you anticipate market moves, but they should always be used in conjunction with other tools for confirmation. They are a piece of the puzzle, not the entire picture.