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Risk Management: The Only Edge That Never Fails

Position sizing, stops, R-multiples, expectancy, leverage, portfolio heat and a written risk plan. The arithmetic that keeps you in the game long enough for any other edge to matter, shown step by step for stocks, futures, forex, crypto and prop accounts.

Module 1: Why risk comes first

Losses compound against you, recovery is harder than the fall, and the traders you see are the survivors.

  1. The math of ruin8 min
  2. The drawdown recovery table7 min
  3. Survivorship and the graveyard6 min
  4. Size is the only lever you fully control6 min

Take the module quiz

Module 2: Position sizing

Fixed fractional risk, the 1% rule, sizing from the stop, and worked examples for every market.

  1. Fixed fractional sizing and the 1% rule8 min
  2. Size from the stop, not from conviction8 min
  3. Worked examples: stocks and futures10 min
  4. Worked examples: forex and crypto10 min

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Module 3: Stops, targets and R

Measure every trade in R, keep an honest log, and compute the expectancy that tells you whether you have an edge.

  1. Defining 1R7 min
  2. R-multiples and your trade log8 min
  3. Expectancy10 min
  4. Why a 40% win rate can be very profitable8 min

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Module 4: Leverage and margin

How leverage amplifies both directions, where margin calls and liquidations sit, and why small accounts with big leverage die.

  1. How leverage cuts both ways8 min
  2. Margin calls and liquidation9 min
  3. Futures: notional versus margin9 min
  4. Small account, big leverage7 min

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Module 5: Correlation, exposure and portfolio heat

Correlated positions are one bet, total open risk is what can hit you today, and daily loss limits protect the whole account.

  1. Correlated positions are one trade8 min
  2. Portfolio heat and total open risk8 min
  3. Max daily loss and prop-firm rules9 min

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Module 6: The risk plan

Write the one-page plan, add rules for tilt and stopping, scale up on evidence, review monthly, and copy the template.

  1. Writing a one-page risk plan9 min
  2. Tilt rules and stopping for the day8 min
  3. Scaling up and the monthly review8 min
  4. The risk plan template7 min

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Educational content, not financial advice.