Risk Management
Position sizing, R-multiples, drawdowns, and ergodicity.
8 chapters · 1 hr total
- 01
Position Sizing: The Math That Decides Whether You Survive
Position sizing, not entries, not signals, is the single biggest determinant of long-term trading outcomes. Here's how to size by risk, not by gut.
9 min read
- 02
The 1% Rule: Why Pros Risk a Tiny Fraction of Their Account Per Trade
Risking 1% of your account per trade isn't conservative, it's the level that keeps you in business through the streaks every active trader hits.
7 min read
- 03
R-Multiples: The Single Metric That Tells You If Your Strategy Works
R-multiples normalize trade outcomes to risk taken, so different trades become directly comparable. The framework that makes strategy evaluation possible.
7 min read
- 04
Drawdowns and Recovery: The Math That Punishes Big Losses
A drawdown isn't just a temporary setback, losses compound asymmetrically against you. Understanding the math is what makes you protect your capital seriously.
8 min read
- 05
The Kelly Criterion: Optimal Bet Sizing (And Why You Should Use a Fraction of It)
Kelly tells you the mathematically optimal fraction of capital to risk per bet. The math is simple; the practical application requires understanding why full Kelly is too aggressive.
7 min read
- 06
Ergodicity in Trading: Why Average Returns Don't Tell You What Happens to You
An average return across many traders isn't the return any single trader gets. The distinction is ergodicity, and ignoring it is one of the deepest reasons traders blow up.
7 min read
- 07
Correlation Risk: Why Your 'Diversified' Portfolio Might Be One Big Position
Multiple positions don't diversify if they all move together. Correlation risk silently concentrates exposure in ways position-level analysis misses.
7 min read
- 08
Portfolio Construction: Building a Crypto Portfolio That Actually Survives
Portfolio construction goes beyond individual trades, how you allocate across assets, strategies, and time horizons determines what your overall returns and risks actually look like.
8 min read