Introduction to risk

management.

Technical Analysis Mastery

‘’In trading/investing it's not
about how much you make ,
but how much you don't
lose’’.

-bernard baruch
What is risk management ?
Boat A , Has life jacket. Boat B , Has no life jacket.

YOUR CHOICE A OR B?
 A
This is how risk management saves us when we face
series of loss and drawdown in trading, Managing the
risk is the most important thing in trading.

This is same as the boat , When the boat sinks the life
jacket save our life same is the case with the risk
management.
RISK PER TRADE :
Most traders are comfortable risking 1-2 of the capital per trade.

1-2% risk per trade is the baseline to start with.

RISK/REWARD ratio commonly know as R/R ratio.

R/R reflects how much risk a trader is taking on a trade to

reach a certain reward
 How to implement risk
management :
Portfolio size = 6000 usd

Risk per trade 2% = 120$

Risk/Reward = 3r ( Per trade)
Expected profit if take profit hits = 360 dollars
Expected Loss if stop loss hits= 120 dollars

Case : if we win 15 trades and lose 15 trades

total loss = 120x15=1800$

total profit = 360x15= 5400

Hence final outcome = 5400$-1800=3600$ still in profit.

 If you are an average trader and
difficult to find a 3r trades lets try
with 2r on the same amount. What
happens after 30 trades with 50%
accuracy
Portfolio = 6000 usd
Risk 2% per trade =120 dollars
Expected profit if take profit hits = 240 dollars
Expected loss if stop loss hits = 120 dollars
After 30 trades
With 50% accuracy
15 trades won = 3600 dollars
15 trades loss = 1800 dollars
3600-1800 = 1800 dollars still profit
‘’ THIS IS THE POWER OF RISK MANAGEMENT’’
 ‘’NEVER GO FOR THE TRADES
THAT HAVE HIGH RISK AND LOW
REWARD, DO NOT GAMBLE.OUR
MAIN JOB AS A PROFESSIONAL
TRADER IS TO MANAGE RISK’’

ALWAYS RISK 1-2 OF THE PORTFOLIO PER TRADE

IN THE BEGINNING , CONSISTENCY AND PATIENCE
IS THE KEY TO SUCCESS.