Trader Mindset

Why it's smart to Trade below your maximum risk


Listen Later

Your max risk per trade is just that - your max. You might consider trading within that risk measurement. Why? Murphy's Law. Take that into account when you are position sizing your trades.

You can normalize risk across all instruments so that you can think of each security in terms of risk units, that is, shares or contracts per unit. That's achieved by calculating the volatility of each instrument. In position sizing this way, you won't trade one more aggressively than another. They'll all be the same risk % to your overall account.

For example, given the prevailing volatilities, 26 contracts of Sugar might be equal to only 6 contracts of Crude Oil in terms of percentage risk to your capital. Each would be a 1% risk unit even though Sugar has 4x plus more contracts than Crude Oil.

...more
View all episodesView all episodes
Download on the App Store

Trader MindsetBy Michael Martin

  • 4.9
  • 4.9
  • 4.9
  • 4.9
  • 4.9

4.9

111 ratings


More shows like Trader Mindset

View all
The Joe Rogan Experience by Joe Rogan

The Joe Rogan Experience

229,728 Listeners

REAL AF with Andy Frisella by Andy Frisella

REAL AF with Andy Frisella

32,871 Listeners

The Compound and Friends by The Compound

The Compound and Friends

2,166 Listeners

B The Trader by Alex B

B The Trader

360 Listeners

The TraderLion Podcast by TraderLion

The TraderLion Podcast

42 Listeners