Risk and execution
Size a position from invalidation, distinguish leverage from exposure and test whether a setup survives real trading costs.
What you will practise
Write a trade plan whose quantity, execution assumptions and evaluation rules another person could reproduce.
Before you start
- Understand the difference between a long and a short position.
- Be comfortable with percentages; no live position is needed for these exercises.
Course outline
- 1
Calculate position size from your invalidation level
Work backwards from a risk budget and a meaningful stop. Include fees and slippage, round quantity down and avoid counting leverage twice.
7 min - 2
Separate leverage, margin and liquidation risk
Compare one fixed position at two leverage settings. Calculate initial margin and understand why a maintenance-margin buffer is not an exact liquidation price.
7 min - 3
Calculate trading expectancy after fees and slippage
Turn win rate and average outcomes into net expectancy. Find the break-even win rate and see how a promising setup becomes negative after costs.
7 min - 4
Choose between stop-market and stop-limit orders
Separate a stop's trigger from its execution. Compare a price gap, partial fills, reduce-only and exchange protection rules before relying on an exit.
7 min - 5
Build a trading journal that can reject a setup
Freeze entry and exit rules, retain rejected trades, measure net outcomes and use chronological holdout data without repeatedly tuning to the answer.
8 min
Educational material. Examples do not establish a profitable strategy. Trading costs, gaps and liquidation can produce losses beyond a planned stop.