In this lesson, Irek explains why the 1% rule is the most important risk management technique that we have within Trading MasterClass. Oftentimes traders will blow their entire accounts because they risk too much. Follow the 1% rule that Irek explains in this lesson, and only scale up to 2% risk once very specific metrics are achieved (and even then, upping risk is optional).
Capital partitioning is optional.
In simple terms: You have $50,000.00 worth of capital. You put $25,000.00 of that into your trading account, and the other $25,000.00 into a safe, liquid investment. You then risk 2% on each trade. This means you’re only risking half of the account, but tradin...
Correlation risk is important - and goes hand in hand with capital preservation. For example, say the Tech sector is presenting 5 different stocks for a short. If you choose to execute all 5 positions, that would be risking 5%. Instead, you can eliminate the correlation risk, by choosing to execu...
In this lesson, you’ll learn how to calculate your position size (i.e. how much you are buying or selling of a particular stock, or cryptocurrency, etc), and put together all of the concepts you’ve already learned relating to risk management.
