Jesse Livermore's 12 Rules of Risk Management

1. Never average down on a losing position
Averaging down turns small losses into fatal losses.
2. Always use a stop loss
Trading without a stop is a bet without limits.

3. Cut losses quickly
Losses should be accepted immediately, without debate.
4. Let winners run
Big money comes from a few big winners, not many small ones.

5. Only trade when the market confirms your idea
Your opinion means nothing until the price agrees.
6. Never trade with hope
Hope is not a strategy: it’s an admission of being wrong.

7. Risk only a small part of capital on any trade
Survival comes before profits.
8. Trade with the main trend
Fighting against the trend is the fastest way to ruin yourself.

9. Stay calm when you are right
Impatience kills gains more than bad entries.
10. Stay out of the market when conditions are unclear
No position is a position.

11. Increase size only when you are winning
Pyramiding only works in your favor, never against you.
12. Protect capital above all
You won’t recover if you get wiped out.

Each rule was paid for with losses, pain, and ruined accounts.