risk-mgmt

Build a risk-managed trading system in 60 minutes

Position Sizing + Risk Rules + Stress Test + Journal = survivable strategy

60 min · intermediate

What you'll have when finished

  • Account-wide risk limits enforced by the platform (auto-halt on breach)
  • Position sizing math you trust, applied to every trade
  • Stress-tested portfolio against major historical crashes
  • Trading journal habit established for ongoing learning

Before you start

  • Risk management does not guarantee profits — it ensures you survive long enough to compound
  • Most blow-ups come from skipping these steps, not from bad trades

Walkthrough

  1. Set account-wide Risk Rules (10 min)

    Open Settings → Risk Rules. Pick the Moderate preset to start (5% daily loss, 15% drawdown, auto-halt ON). Override the Default Stop-Loss to whatever you actually use (3% is common, 1.5% for tight, 5% for wide-range trades). The Emergency Halt button in the hero is your nuclear option — test it once now (it'll show zero bots to halt since you have none, but you'll know it works). Watch the 30-day backtest preview at the bottom. Red bars = days where this limit would have triggered. If you see many reds, your limit is too tight; if you see zero across 30 days, it might be too loose.

    Success criteria: Daily loss limit set · Drawdown limit set · Auto-halt toggled ON · Default stop-loss matches your trading style

  2. Calculate position size for your next trade (5 min)

    Open /position-sizing. Inputs: - Account balance: your actual total capital - Risk per trade: 1% to start (NEVER above 2% if you're new) - Entry + Stop: planned levels The calculator outputs position size in USD and base asset. Use those exact numbers when you open the trade — don't round up "because it feels small". The risk math doesn't work if you over-size. Save this calculation for every trade. Within 50 trades you'll have it memorized.

    Success criteria: Account balance reflects reality · Risk per trade ≤ 2% · Position size copied to trading page exactly

  3. Stress-test your current portfolio (10 min)

    Open Portfolio Analytics → Stress Test tab. Run THREE scenarios: - COVID March 2020 (broad crypto crash) - LUNA Collapse May 2022 (correlated alt-coin death) - FTX November 2022 (exchange counterparty risk) For each, note the simulated max drawdown. If ANY scenario shows >40% drawdown, your portfolio is over-concentrated. Reduce exposure to the heaviest contributor (usually a single asset). This 10-minute exercise is what professional risk managers do quarterly. Doing it once is better than never. Doing it quarterly is professional-grade.

    Success criteria: All 3 scenarios run · Max drawdown noted for each · Concentration adjustments made if any scenario >40%

  4. Apply Kelly Criterion to your sizing (10 min, if you have 50+ closed trades)

    Skip this step until you've closed 50+ trades — Kelly math is noisy on small samples. Once you qualify: Portfolio Analytics → Kelly tab. The page shows your actual win rate, R:R, and the Kelly fraction. Multiply by 0.25 to 0.5 to get fractional Kelly. Use THAT as your risk-per-trade % on the Position Sizing calculator going forward. Real example: 60% win rate, 1.5R = Full Kelly 33%. Half Kelly = 17%. Quarter Kelly = 8%. Most pros run quarter-Kelly until they've proven their edge over 200+ trades.

    Success criteria: Sample size ≥ 50 closed trades · Use quarter-Kelly to start · Adjust quarterly as edge stabilizes

  5. Start journaling every trade (15 min/week ongoing)

    Open /journal. For every closed trade going forward, add a 1-sentence thesis + 1-sentence lesson. Tag aggressively (strategy, asset, regime, emotion). Pick ONE day a week (Sunday morning is popular) for a 20-minute weekly review. Read your last 7 days of trades. Spot patterns. The Journal's filter + aggregate stats surface them. The discipline of journaling 50 trades teaches you more than reading 50 trading books. Most traders skip this — it's the difference between gamblers and craftsmen.

    Success criteria: Weekly journaling ritual scheduled · 1-sentence thesis on every trade · Tags used consistently

  6. Set quarterly review reminder (1 min)

    On your calendar, add a recurring quarterly event: "haythix risk review." During that 30-minute review: 1. Re-run stress tests against current portfolio 2. Update Kelly fraction with last quarter's stats 3. Adjust risk rules if your account size or strategy has changed 4. Re-read your Journal lessons aggregate A risk system that doesn't get reviewed becomes irrelevant within 6 months as your strategy and account size evolve. Quarterly cadence is enough.

    Success criteria: Calendar reminder set · Quarterly review process documented

What's next

**What you now have:** - Account-wide hard limits (can't blow up beyond X%) - Per-trade math that's consistent across every position - Calibration against historical crisis scenarios - A learning system that compounds over time **What you still need:** - An actual edge (a strategy with positive expectancy) - Patience to let the system work (1+ year horizon) - Truthful entries in your Journal **Most blow-ups come from skipping these steps, not from bad trades.** The math is dull but it's the math that lets you survive long enough to find an edge. **Next step:** [Choose the right bot for your style](/learning-library?guide=choose-the-right-bot) to apply this discipline to specific bot types.