# Risk Management

Risk management is the most important part of trading perps, here is how you can manage your risk effectively

**Start with Low Leverage**

Just because 50-100x leverage exists, it doesn't mean you should use it. Always aim to keep your leverage as low as possible - your trade has a sensible liquidation price and you still have margin available to open more trades

Risks of using high leverage:

* Your liquidation distance is reduced
* Normal volatility becomes dangerous to your position
* You emotions will play a bigger role and your decision making will be worse

**Position Sizing**

Size your position so that if your stop loss is hit, you only lose a small % of your account

The best way to get your position size is to work backwards

1. Decide your invalidation / stop loss level
2. Set your size so that the loss at that level = your chosen risk %

**ALWAYS have a Stop Loss**

Having a set level where you will accept you're wrong will keep you from losing more than intended in situations where you are wrong