Most people who take up trading spend nearly all their attention on entries — when to get in, which signal to trust, which chart pattern means what. Almost none goes to how much to risk and when to get out. This is backwards, and the maths below is why.
The single most common mistake is judging a strategy by how often it wins. Consider two traders over 100 trades:
| Trader A | Trader B | |
|---|---|---|
| Win rate | 90% | 40% |
| Average win | +$10 | +$300 |
| Average loss | −$100 | −$100 |
| Net over 100 trades | −$100 | +$6,000 |
Trader A wins nine times out of ten and loses money. Trader B is wrong more often than right and makes a fortune. Win rate on its own carries no information about profitability.
The measure that does is expectancy — the average amount you make per trade:
expectancy = (win% × average win) − (loss% × average loss)This is why "cut losses short, let winners run" is repeated endlessly despite sounding like a platitude. It is a description of how to keep average win larger than average loss — the only lever, besides win rate, that determines whether the equation is positive.
It also explains why Trader A's approach is so seductive. Winning 90% of the time feels like mastery. The losses are rare enough to seem like bad luck rather than the structural consequence they are.
Positive expectancy is necessary but not sufficient. You also have to still be solvent when it pays off, and that is a question of sizing.
A widely used guideline is to risk a small fixed fraction of your account on any single trade — commonly 1–2%. Not because those numbers are magic, but because of what they do to a losing streak:
| Risk per trade | Account left after 10 straight losses | Gain needed to recover |
|---|---|---|
| 1% | 90.4% | +10.6% |
| 2% | 81.7% | +22.4% |
| 5% | 59.9% | +67.0% |
| 10% | 34.9% | +186.8% |
| 25% | 5.6% | +1,676% |
Ten consecutive losses is not a freak event. A strategy that wins 50% of the time will produce a 10-loss streak reasonably often across a few hundred trades. At 1% risk it is an annoyance. At 25% risk it is the end.
A stop loss is a predetermined exit that closes a position once it moves a set amount against you. Its purpose is not to predict anything. It exists to convert an unknown loss into a known one, decided while you are calm rather than while you are losing money.
Two failure modes are worth naming:
The corresponding tool on the other side is a take-profit: an exit set in advance for a winning position. It solves the mirror-image problem, where a winning trade is held until it round-trips back to break-even because no exit was ever defined.
None of the above is complicated. Expectancy is one line of arithmetic; sizing rules take a minute to apply. People fail at them anyway, because each rule asks you to do the opposite of what the moment demands.
Notice these all push in the same direction: smaller wins, larger losses. Human instinct degrades exactly the term the maths needs you to protect.
Rules are easy to agree with while reading and hard to follow while a position moves. That gap is what RugPull.trade is built to expose.
The game's auto-close feature lets you set a take-profit and stop-loss before you enter, and now draws both on the chart as dashed TP and SL lines alongside your LIQ level — so you can see, before committing, exactly where your exits sit relative to the price. The stats screen tracks your win rate, biggest win, biggest loss and streaks, which is enough to compute your own expectancy and find out whether you're Trader A or Trader B.
Most people discover they are Trader A. It is a much cheaper discovery here than in a real account.
Test your expectancy →