All courses🛡️ Risk · Level 4.1
🛡️ Risk as a System
Position sizing, expectancy, exposure and drawdown. Most traders lose not because their signal is wrong, but because their size is wrong.
4 lessons ~21 min read
01020304
The 1% rule and why it saves you
Explain why percentage risk de-risks automatically while fixed cash risk does not Read the recovery column rather than the drawdown column when choosing a risk level Derive position size from account, risk percentage and stop distance Add a per-currency cap so correlated positions cannot turn 1% into 5%
Risk-reward and asymmetric bets
Express risk and reward in R, so trades across instruments are comparable Calculate expectancy and explain why it, not win rate, decides profitability Recognise the three ways a good reward ratio is lost in execution Size a target from the chart rather than working backwards from a ratio
Drawdown: the math of recovery
Calculate the return required to recover any given drawdown Distinguish normal drawdown from excess drawdown before reacting Estimate the expected worst losing streak and plan a realistic maximum Apply a written de-risking ladder instead of increasing size to recover
Exposure and correlation (the hidden risk)
Maintain a per-currency exposure ledger alongside per-trade risk Treat correlations above +0.7 as a single position Account for correlations strengthening under stress and for margin compounding Test diversification by asking whether two positions could win independently
Final challenge
Answer all 12 questions. You need 10 of 12 correct to unlock the certificate — 2 can be wrong. Retakes are unlimited, so take your time.