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Risk & Sizing
What Risk Is
- Risk Is Not One Thing30 min read · Risk is a word doing three jobs. Volatility is dispersion you can measure; uncertainty is
- The Recovery Tax25 min read · A drawdown is measured from the highest point the account reached, not from where it
- Expectancy Is the Only Verdict30 min read · Expectancy = win rate × average win − loss rate × average loss, measured in R so that
- Stops That Belong to the Chart30 min read · A stop has one job: it marks where the idea is wrong.
Sizing and Survival
- The 1% Rule, Computed35 min read · Size = (capital × risk fraction) ÷ stop distance, and the fraction is the whole system
- Equal Risk, Unequal Size30 min read · Risk is position size × stop distance, so equal risk across instruments with different
- Ruin Is a Function of Size35 min read · Ruin is not bad luck, it is the interaction of streak frequency with position size.
- Leverage Is a Different Risk30 min read · Leverage does not change the expectancy in R, it changes what each R is worth.
- The Shape of Growth40 min read · The growth rate of a strategy is a curve with a peak, not a line: for a 45% win rate with
- Correlation Betrays You in Crises35 min read · Diversification is measured in drivers, not tickers: twelve names with a 0.75 pairwise
- What the Whole Book Risks30 min read · Heat is what the book loses if every stop is hit at once, measured on stop distances
The Tail and the Cost
- The Threshold and the Tail35 min read · Value at risk is a quantile — the loss not exceeded 95% of the time — so it says where
- What Insurance Costs35 min read · Every hedge has a negative expected value and a positive purpose, so the question is
- Liquidity and Gap Risk30 min read · A stop controls the exit and not the price, so two things a sizing rule assumes can fail
- Return per Unit of Risk30 min read · A return is only half a result, and the other half is what it cost to get: Sharpe divides
Policy and Failure
- How Smart Money Blows Up35 min read · Leverage turns a small adverse move into the whole equity: a 20% fall wipes a
- Writing a Risk Policy30 min read · A risk policy is a short list of numbers agreed before they are needed: risk per trade, a
- Capstone: Run the Book Under the Policy40 min read · The capstone applies the whole subject to one book: each position is sized from its stop
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Learn content is for education only — not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk. Examples are simplified and historical patterns never guarantee future results.