A working edge with bad risk management makes no money. Bad edge with good risk management loses slowly. Only the combination pays — and risk management is the half you fully control.
1. Position sizing
Size from the stop, never from the account. Risk amount divided by stop distance gives position size. If the correct size feels too small, the stop is too wide or the account is too small — not the risk percentage.
2. The drawdown recovery problem
| Drawdown | Gain needed to recover |
|---|---|
| 5% | 5.3% |
| 10% | 11.1% |
| 20% | 25% |
| 33% | 50% |
| 50% | 100% |
This asymmetry is the entire argument for tight risk. Small losses are cheap to recover; large ones are structurally difficult, which is why a maximum loss rule exists at all.
3. Correlation
Four correlated positions at 1% each is a 4% position, not four 1% positions. Count your exposure by driver — dollar, risk sentiment, rates — not by ticket.
4. The daily stop
The single highest-value rule available to a funded trader. Half the firm's limit, mechanically enforced, no exceptions. It costs you occasional recovery days and prevents nearly every breach.
Rules that reward good risk management
Static drawdown on every evaluation means a good run permanently increases your buffer.
Frequently asked questions
What is the most important risk management rule?
A fixed, small risk per trade — 0.5% to 1%. Everything else is secondary, because drawdown recovery is asymmetric: a 20% loss needs a 25% gain to recover, and a 50% loss needs 100%.
How does correlation affect position sizing?
Correlated positions are effectively one trade. Four positions at 1% risk driven by the same factor is a 4% position, and a single adverse move takes all four together.
FundedAxe evaluations and funded accounts are simulated. Traders do not trade real client capital; rewards are paid on simulated performance under the terms of the FundedAxe trader agreement.