risk management

January 21, 2018

Capping your losses

At this month’s Meetup, we will be discussing several key principles to successfully trading the intraday timeframe. One of the most important principles which is applicable to all traders regardless of timeframe is the necessity to cap your losses. One aspect of trading that attracts a great many traders is the freedom that trading can afford. As an independent trader, you have no boss – There’s no one there to tell you what to do, how to do it, or when to do it. This virtue turns out to be one of one of the greatest obstacles for many individual traders […]
June 14, 2017

Position Sizing For Success ⚖️

In last week’s lesson, we introduced 2 extremely important measures that all traders need to track and monitor. Now that we’ve set that baseline, in this week’s lesson we will build upon the 2 measures we introduced last week and launch into the topic of position sizing. As it pertains to this month’s theme of risk management proper position sizing is key in the practice of risk and loss prevention. Entire books are dedicated to the topic of position sizing so for the purposes of this lesson I will introduce a very common method for position sizing called Fixed Fractional position […]
June 7, 2017

2 Ratios All Traders Need To Track

This week’s lesson we will be brief however it will cover an essential risk management concept. If you are new to risk management concepts then understanding this lesson will allow you to objectively understand the strengths of your trading system, how and where you can improve your results, and gain an appreciation for how much risk you should be taking on. There are 2 measures which all traders need to be tracking regardless of your chosen method or timeframe. Those 2 measures are: Win percentage (W) Gain vs loss ratio (R) The win percentage (W) is the probability that a […]
May 29, 2017

A Crazy Little Thing Called Risk 😨

So to kick things off, the first theme we’ll be exploring is the topic of  “Risk and Money Management“. This week’s lesson comes from our “in-house” risk expert – certified risk manager and frequent contributor, Michael Toma who challenges each of us with a set of important questions to consider to identify the risks to our trading businesses. It’s often the 800 lb. gorilla in the room. The topic we traders mention constantly but more times than not we would rather discuss our dental visit than divulge our risk management plans. Most traders appreciate the importance of risk management however where educators often fall short […]
February 19, 2017

The Shanghai (Overnight Futures) Surprise

This article is submitted by Michael Toma.   Michael is a Certified Risk Manager, author, and trader and is our “resident risk” contributor at The Trading Edge. In this fun article Michael shares his recent experience of trading while vacationing in Asia and shares his experience of preparing to trade away from the trading desk.   I recently took a trip to Asia to celebrate the Chinese New Year holiday. I look forward each year to experiencing Shanghai life and eat great food ‘till my heart’s content. The markets however don’t really care about my travels and I spend a few days before each […]
May 17, 2016

Loading the Boat with Trade Risk

This article is submitted by Michael Toma.   Michael is a Certified Risk Manager, author of The Risk of Trading: Mastering the Most Important Element in Financial Speculation, trader, and our “resident risk” contributor.   If there is one topic within the risk management space that I get lots of questions on is that of position sizing.  I agree; it’s most often misunderstood or at least the most difficult to maintain a level of discipline.   Personally, I take a very data-driven approach and it does require some results tracking from my journal to help with my position sizing. In a recent […]
March 28, 2016

The Phantom Audit

  This week’s article is submitted by Michael Toma.   Michael is a Certified Risk Manager, author, and trader and is our “resident risk” contributor at The Trading Edge (thetradingedge.org).   Since I started trading, I have kept some form of records in a trade journal. The actual data components I track and the structure has changed several times since my spreadsheet days but the information gathered from the journal still acts as the basis of my trading decisions. I applaud those who maintain a trade journal in any form and use the information to develop solid strategies giving you a consistent […]
January 25, 2016

Navigating These Volatile Markets

Today’s article is submitted by Michael Toma.   Michael is a Certified Risk Manager, author, and trader and has graciously joined The Trading Edge (thetradingedge.org) team to be our “resident risk expert”.   If you have any questions on risk management, drop Michael a comment below. The new year brings lots of trader resolutions. Maybe it is a commitment to being more disciplined or to better use your technical tools at entry and exit points. All great; until the market volatility and daily ranges triple. So what can traders do to keep themselves safe yet engaged during these turbulent times. […]
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