Trading Risk Management Boot Camp - Day 13

Introduction

• Welcome to Day 13 of the Boot Camp
• Focus on disciplined practices, particularly basic risk management

Importance of Risk Management

• Definition: Literally how much to risk and when to risk it
• Misunderstanding: It's not just about managing money, it's about emotional discipline
• Discipline is Key: Having a stable and strong headspace is critical
• Real-World Application: Disciplined traders tend to make more money
• Comparison: Trading is like any other job where discipline results in success

Expectation vs. Reality

• Long-Term View: Don't expect to make 100K in the first year; expect to lose money initially
• Education Analogy: Treat losses as tuition for learning the skill
• Emotions in Trading: Expect a transitional phase moving from demo to live trading

Practical Risk Management

• Risk Percentage: Risk 1-3% of your account per trade
• Why 1-3%?
  • To avoid blowing your account (100 losing trades needed to go to zero)
  • Losing streak management
• Trade Frequency: Manage the number of trades per day to avoid compounding losses

Risk Calculation Tools

• Self-Learning: Use online calculators like lot size calculator, position size calculator
• Homework: Learn how to calculate risk for options, futures, forex through a simple Google search

Emotional Control and Overtrading

• Emotionlessness: Essential in making and losing money in trading
• Mistake Management: Recognize mistakes and ensure not to repeat them
• Trade Limit: Avoid taking more trades or risking more than planned

Perspective on Trading Capital

• Treating All Accounts Equally: Even small accounts should be managed as if they were large
• Long-Term Vision: Aim for consistent gains rather than quick riches

Avoiding Overambition

• Slow Growth: Understand the process takes time; focus on learning the skill
• Mindset Shift: Prioritize understanding trading over making quick money
• Infinite Money Glitch: Mastering the skill provides limitless earning potential

Course Summary and Next Steps

• Summary: Risk 1-3% per trade, manage daily trades, value emotional control
• Next Steps: Learn trade setups and align biases
• Continued Learning: Focus on rules and disciplined approach for long-term success

Closing Remarks

• Encouragement: Continue focusing on learning the skill rather than rushing to make money
• Daily Practice: Maintain disciplined trading practices to ensure long-term growth