04 Risk and Money Management

107 STUDENTS ENROLLED

Overview

This course module covers the basics of risk and money management. The core concepts are to minimize the risk of ruin and maximize equity growth from the perspective of a short-term trader.

Among other things, we will use the expectancy value and the Kelly Criterion for risk control and capital growth optimization.

 

Learning objectives

After successfully completing units 041 and 042, you should be able to:

  1. describe how changes in various input variable impact probability distributions,
  2. use trade- and time-based risk limits to avoid catastrophic loss of your trading account,
  3. perform simple Monte-Carlo simulations and interpret corresponding probability distributions,
  4. calculate the expectancy value and risk-over-reward ratio of a trading strategy,
  5. use the Kelly Criterion to define optimal position size and loss limits and
  6. select corresponding trading vehicles that match your risk profile.

Course Curriculum

Risk management
041 Risk Management Basics 00:14:00
Money management
042 Money Management Basics 00:17:00
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About

CEED.trading’s mission is to feed trader intuition based on understanding market microstructure and the constraints of order execution algorithms.

We believe in human traders and that increased systematic trading actually presents an opportunity for hybrid-discretionary traders.

This is why we aim to develop traders in our Prop Trader Trainee program to place them with our partner firm.

Our office is located in the heart of Central Europe in Budapest, Hungary.

CFTC Rule 4.41

Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Testimonials appearing may not be representative of other clients or customers and are not a guarantee of future performance or success.

Risk disclaimer

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. This is neither a solicitation nor an offer to buy or sell futures, options or forex. Past performance is not necessarily indicative of future results.

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