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Intermediate course
Risk & Money Management
Position sizing, reward-to-risk, stop placement, the maths of drawdowns and a written plan.
7 lessons · 59 minutes · Free
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Mark every lesson complete and pass the final quiz with 70% or more to get a certificate of completion. You can download it as a PDF or share it on LinkedIn.
Get your certificateA trading account ends when the trades that go wrong cost too much. The protection is to decide, in advance, how much a bad trade is allowed to cost.
This course is that decision, made properly. It is short, and it is mostly arithmetic.
Lessons
- 1Risk per tradeThe amount you lose when a stop is hit. How to set it, why 1 to 2% is the usual answer, and how it turns into a position size.
- 2Reward-to-risk ratioWhy a method that loses more often than it wins can still make money, and how to judge a trade before you take it.
- 3Stop-loss placementWhere a stop belongs, why "tight" and "arbitrary" stops both lose, and how to let the chart decide.
- 4The maths of drawdownsWhy losses hurt more than gains help, why losing streaks are guaranteed, and how to set risk so you survive both.
- 5Correlation riskThree positions can be one big bet in disguise. Learn how pairs move together and how to count your real exposure.
- 6Writing a trading planPut every rule from this course on one page, in writing, before the next trade. Then follow it.
- 7Course check: test yourselfFlashcards for the risk vocabulary, and ten questions on sizing, ratios, stops, drawdowns, correlation and planning.