Not everyone realizes the importance of a risk management system in trading. This is especially true for novice traders who are more concerned about the bottom line. They are mainly interested in making money. Like every other major undertaking though, this usually involves following a process.

Many seasoned traders know that position sizing is a vital part of any trading plan. Many beginner traders however make the mistake of not paying adequate attention to this step. They believe that it is enough to simply define the initial stops. This however is a very incomplete way of trying to manage your risks.