Risk Management

Loss Management

In allocating assets for our trades, we use 3 filters of loss management.

First, we use maximum loss per trade

Maximum risk per trade is at 0.5% of equity: This means that maximum amount risk used per trade is 0.5% of the equity. The cost of the trade might differ depending the price level of each instrument.

Second, we use maximum loss per day, week and month:

Maximum risk per day is at 1.5% of the portfolio or three back to back trades gone wrong. After reaching max loss per day level, we stop trading for that day. No exceptions to this rule.

Maximum risk per week is 3%. When this level reached, trading stops until the next week.

Maximum risk per month is 5%. When this level reached, trading stops until the next month.

Third, no more than 40% of gains per day must be given back to the market.

After reaching target gains for the day, if there are opportunities, we continue trading. However, maximum loss from the high of the equity must not exceed 40% from the peak equity for that day.