Risk per trade, in money before ticks

Every risk lesson in this track, on any asset class, starts from the same sentence: decide what a trade may lose before deciding anything else about it.

Money first, market second

A trade's risk is not a feeling, a chart level or a number of ticks. It is money: a fixed fraction of the account, decided in advance, the same discipline the FX and indices tracks built. One or two per cent per trade is the conventional band, and the exact figure matters less than its constancy - a risk budget renegotiated per trade is not a budget, it is a mood.

Why commodities test this harder

• The contracts are large. A budget that buys a comfortable handful of index contracts may buy one WTI contract, or none - the sizing lesson next makes this concrete.
• The moves are violent. Module 1's inelasticity means the distance a stop needs is set by the instrument's range, not by what the budget wishes it were.
• The events are scheduled. A report can move the price across any stop instantly, which is why this module treats gap risk as its own subject rather than a footnote.

The order of operations

Balance times risk fraction gives cash at risk. The market then says how far the stop must sit to be meaningful - lesson 3's subject. Those two numbers divide into a size, and the size rounds down - lesson 2. Notice what never happens in that sequence: the size is never chosen first, and the stop is never moved to make a chosen size fit. Every blown commodity account you will ever read about ran the sequence backwards.

Write the number down before the module continues: what one trade may cost your account, in your currency. Every lesson from here divides by it.