Capital partitioning is optional.
In simple terms: You have $50,000.00 worth of capital. You put $25,000.00 of that into your trading account, and the other $25,000.00 into a safe, liquid investment. You then risk 2% on each trade. This means you’re only risking half of the account, but trading as if it was the full amount.
In this lesson, Irek will explain capital partitioning in more detail, and how to use it as leverage and not to increase risk, but actually to lower risk.
Correlation risk is important - and goes hand in hand with capital preservation. For example, say the Tech sector is presenting 5 different stocks for a short. If you choose to execute all 5 positions, that would be risking 5%. Instead, you can eliminate the correlation risk, by choosing to execu...
In this lesson, you’ll learn how to calculate your position size (i.e. how much you are buying or selling of a particular stock, or cryptocurrency, etc), and put together all of the concepts you’ve already learned relating to risk management.
1 Comment