Risk Management Quiz

1. A common rule is to risk no more than X% of capital per trade. What is X?

10% 5% 1–2% 25%

2. If you risk 2% per trade, how many losses in a row would halve your account (approx)?

5 15 35 100

3. What does a stop-loss order do?

Guarantees a fixed loss Caps risk at the order price barring slippage/gaps Doubles your position Pays an insurance bonus

4. If your stop is 50 pips and you want to risk $100, what is the correct mini-lot size on EUR/USD (approx)?

0.1 lot (1 mini) 0.2 lots 2 lots 5 lots

5. What is "drawdown"?

Total profit since open Decline from a previous equity high Maximum leverage allowed Trading commission

6. After a 50% loss, what return do you need to break even?

50% 75% 100% 200%

7. What is a "risk-to-reward ratio"?

Win-rate percentage Planned reward divided by planned risk Account size divided by leverage Spread divided by commission

8. A daily loss limit primarily protects you from...

Tax authorities Tilt and revenge trading on bad days Regulatory action Broker margin calls

9. Which sequence is generally safest?

Trade idea → entry → stop Stop → reward target → entry → idea Idea → risk per trade → position size → entry → stop Position size → idea → entry → no stop

10. Cashback or rebates affect risk how?

Eliminate market risk Increase position-size limits Reduce effective trading cost; do not change market risk Convert losses into wins

11. What does "expectancy" measure?

Average outcome per trade in R-multiples Annual interest rate Maximum daily volume Broker rating