Risk Management
16 lessons in this track so far, in the order we suggest reading them.
Position Sizing
BeginnerPosition SizingPosition sizing decides how many shares or contracts to trade so each loss stays small. Learn the formula, worked examples for each market and common mistakes.BeginnerFixed Percentage vs Fixed Dollar RiskFixed percentage risk sizes trades as a share of your current account; fixed dollar risk uses one amount. Compare drawdowns, growth and when to use each.BeginnerVolatility and ATR-Based SizingVolatility sizing adjusts position size so each trade carries similar risk whatever the market's swings. Learn ATR sizing, volatility targeting and worked examples.BeginnerKelly CriterionThe Kelly criterion finds the bet size that maximises long term growth given your edge. Learn the formula, worked examples and why most traders use less.BeginnerFractional KellyFractional Kelly bets a portion of the full Kelly fraction to cut drawdowns and protect against overestimated edges. Learn how much to use and why.BeginnerCorrelation-Adjusted SizingCorrelated positions can turn several small bets into one big one. Learn how correlation adds hidden risk, simple adjustment rules and portfolio methods.
Limits and Stops
BeginnerStop Loss StrategiesA good stop sits where your trade idea is proven wrong. Compare structure, volatility, percentage and time stops, with examples and the mistakes to avoid.BeginnerRisk/Reward RatioThe risk/reward ratio compares a trade's potential loss with its potential gain. Learn the formula, how it links to win rate, break even maths and common traps.BeginnerMaximum Trade Risk and Daily Loss LimitsA daily loss limit stops you trading after a set loss, preventing one bad day from wrecking your account. Learn how to set daily, weekly and per trade limits.BeginnerPortfolio HeatPortfolio heat is the total amount you would lose if every open position hit its stop. Learn how to calculate it, set limits and adjust for correlation.BeginnerConcentration RiskConcentration risk is the danger of having too much exposure to one asset, sector or idea. Learn how it hides in portfolios, how to measure it and how to limit it.
The Math of Survival
IntermediateExpectancyExpectancy is the average amount you win or lose per trade. Learn the formula, how win rate and payoff combine, expectancy in R and how to improve it.IntermediateRisk of RuinRisk of ruin is the chance that losses drain your account beyond recovery. Learn what drives it, see simulated numbers and how to keep it low.IntermediateLosing and Winning StreaksLosing streaks are a normal part of any strategy. See how long streaks get at different win rates, why they happen and how to handle them without breaking rules.IntermediateMAE and MFEMaximum adverse excursion and maximum favourable excursion show how far trades move for and against you. Learn to record them and use them to tune stops and targets.IntermediateBankroll ManagementBankroll management covers how much money to trade with, how to grow it and when to withdraw. Learn practical rules for funding, scaling and taking profits.