2.Risk Management is managing outcome , which is different than expected .
3.Risk Management -Managing and measuring the area where loss can occur .
4.Healthy Money Management psychology begins when you believe and acknowledge that each
trade outcome is unknown at the time you enter the trade.
5. Every trade has a random outcome, we need to manage our loss on losing trade.
6.Some losing trade are normal part of trading
7.Let your winning trades run & Cut your losing trades short.
8.Avoid being in market that do not provide Winning % [ Report and Holiday market in Christmas]
9. Trade Risk versus Market Risk:-
"Trade Size" controls your Trade risk ,some control like stop loss settings
"Account Size" controls your Market risk, out of control of trader like GAPS,News Event etc.Fund your trading account for Risk Control.
Market risk can be recovered if we manage Trade Risk correctly.
10.Win Ratio : No of winning trade / no of Total trades
11 .Payoff Ratio : Average Winning Trade /Average Losing Trade
12. Percent of capital at Risk : what is the optimal percent of capital at risk on each trade?
13.Risk Of ruin - Screen shot below show even if we get the 2:1 risk : reward and 50 % winning : Risk of ruin is reduced to 0.8%.Make Sure you make risk of ruin work for you than against it.
WARNING SIGNAL- if draw down on last 10 trades exceeds 12% , avoid exposing your self to obscene risk.
