- 4 months ago
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00:00so this is a video on like risk management like that's really what it's on
00:07um but it's really just a kind of a i guess a confirmation and the reason it's a confirmation
00:17i'm not really phrasing it as like anything more kind of dramatic than that is the majority of
00:24people understand risk management the the majority of people understand that you need to manage
00:30your risk the majority of people understand what risk management is when we talk about you know
00:34losing one percent two percent per trade people understand these concepts the problem that people
00:40have is they have zero discipline absolutely zero discipline so everybody knows about risk
00:49management nobody applies risk management and so one of the pieces of feedback that we got
00:54was more discussion around risk management and so this is this is my contribution towards that
01:01area of feedback in terms of discussing risk risk management my my contribution is not repeating to
01:10you the continued need for risk management in terms of you know here's what it looks like here's what
01:17happens when we risk two percent it's telling you that you already know the answer you already know
01:23that you need to practice risk management but you don't do it the the very very like clear
01:30outcome to those that do not practice risk management is a wipeout it is something i have seen countless
01:39times before from countless traders even experienced traders that get carried away and do not manage their
01:46risk now i will add a little bit to that over the course of however long i speak for on this video
01:51but the first things first is nobody can do anything about risk management apart from you no amount of
01:58education no amount of watching videos no amount of like seeing like cred on youtube like will change
02:05the fact that it is you and only you that can practice risk management the other trouble with risk
02:12management is that one lapse sets you back three months which for me is a really really important
02:19marker to understand that i am practicing risk management all of the time right so if i think
02:27to myself well look if you if you let your risk management slip then essentially you can undo three
02:34months worth of gains by having an outrageous loss and so i try and keep things balanced in my head in
02:40terms of that for me is an outcome that i don't want to be in why waste three months for a you know a rush
02:45of blood trade that i decide to risk a stupid amount for right and give back all of that profit that
02:51i've worked hard for on on previous months or weeks so that's a really dangerous thing so we're talking
02:59about kind of you know the need for application of risk management and the need for you as an
03:04individual to practice it and like i said nobody else is going to help you this is not a job where you
03:09have a boss who's able to keep tabs on what you're doing and limit your exposure and you know
03:14control your trades it's you it's only you so if you choose to fuck up that's on you everybody
03:20understands the principles at their basic level when we're talking about risk management it becomes
03:29less important like there's a slight like i'll leave it at that there's like a slight like
03:37uh let's clarify this a little bit more but let's let's just leave it as like a more simple overview
03:43there is less importance on managing risk during raging trends
03:47because very often you're saved because of the strength of the trend so bull market is always a
03:53very good example in the bull market you could use ridiculous size you were very often rewarded for
04:00using ridiculous size risk management sort of you know is we are on the more aggressive end of the
04:06spectrum when we're talking about risk management in a very strong moving trending market
04:11so you know we're kind of we're moving away from the we're moving away from the like let's be really
04:19tight and use one percent if we're in very good strong trending conditions you want to push risk to its
04:25maximum for you
04:26in conditions like we're currently experiencing you want to be reducing risk to a minimum so you want to
04:35slide right to the other side of that spectrum so when we're thinking about risk yes we've got the
04:39application of the principles that everybody understands but we also have different conditions
04:43that impact how much risk we may want to have you know um in the market so strong trending markets we're
04:50always rewarded for putting more risk behind our trades and that's the that's the area that we want
04:56to be in you know typically that's the environment we want to be in we want to be able to push things
05:00hard we want to be able to have a situation where we are able to drive more size behind positions
05:06we want to be in a position where you know everything is kind of working out in our favor
05:11just because we're having the market turn around and support us due to the trend
05:14times like now where it's very choppy there's a lot more kind of stop runs the liquidity is down
05:22the volume is down we're sort of you know we're seeing tighter ranges on some things we have to
05:28reduce our risk appropriately so making sure that you are thinking about risk in different conditions
05:34is also important because once we get those strong trends we want to push the market hard
05:38you know we want to be pushing hard because what we want at those points is maximum returns
05:44and when we have a very strong trend that allows us to push for maximum returns we absolutely need
05:50to take advantage of it when we have a situation that is making it very difficult to trade and actually
05:56is chopping us and is trying to get us to blow our money then we have to protect against that
06:02so very important that at this moment in time we're kind of tighter around risk management
06:07we get looser when the trend is in our favor and we want to be able to push things we want to be able
06:12to aggressively attack into the market we want to be rewarded and we want the patience that we show
06:17during these quiet times to then be rewarded when the conditions are good so the more money we can
06:23look to save now the tighter that we can be in our positioning the tighter we can be around our risk
06:28management serves as better in terms of having more disposable capital during the times the market is
06:33trending during the next you know very large move so you need to think about risk when it comes to
06:40that you know and it's really right now what we're interested in is capital preservation we're interested
06:46in capital preservation because we don't want to blow our account money now in a period of time that
06:51really is not good for many many people a period of time that the trading is actually poor the
06:59environment is poor there's no clear direction it's very aggressive it's a ruthless market it's stopping
07:04people out left right and center and we want to save capital during these times we want to save capital
07:09because we don't want to bleed the account but also because we want more capital at our disposal
07:14once the conditions change and turn around so right now you know you should consider this as look
07:19you can take your stabs at the market you can take your stabs at positioning but you should
07:25absolutely be managing your risk very tightly during these periods of time there will be very few
07:31very high grade setups in this environment those high grade setups are far far better when we have that
07:39strong you know ideally uptrending market just because the the potential gain on the upside versus the
07:45downside so we always kind of want to think about it you know in that regard
07:48the other thing is when we're thinking about kind of you know risking in these situations um
07:55and you know risk as a whole ideally we want to have way more risk exposure to the long side
08:02as as just typically speaking we want to be able to have way more risk on the table when we're getting
08:09long now the reason for that obviously is because of the potential infinite upside versus the the capped
08:16downside potential that we have for any trade so when we're thinking about you know whether or not
08:20we want to be you know all in short
08:22that's a more difficult scenario than all in long
08:27from a risk perspective
08:29so you know making sure that we are thinking about our risk kind of being skewed slightly to
08:38the long side because the reward is significantly improved versus the downside
08:42so making sure that we're thinking about you know look what are the situations in which i would
08:47put more risk on the table around certain areas of the you know uh of the market and of trading
08:53and to the long side is absolutely one of those you know we want to be absolutely positioned and
08:58thinking about risk from being long versus being more aggressive when we're short that doesn't stop us
09:05from in downtrending markets you know still being aggressive should we see a setup that we think is
09:10you know really important to us and you know a strong confluent setup for us
09:14it just means that as a general principle we always want to try and push the upside more and
09:19be heavier with our risk because like i said we've got infinite potential upside and we always have a
09:24cap downside so making sure that we are again skewing our risk slightly into that side is important
09:29so you know this this video is really to kind of refresh you on a couple of things that you may have
09:36forgotten it's to give you some information around the market conditions and the way that that should
09:40impact our risk and the way we're thinking about taking trades and the reasons for that right the
09:46reasons for why we have that thought process why we think about the market in that way during these
09:52periods of time and why we would look at changing that during strong aggressive conditions
09:57downtrending conditions for the majority of people just aren't a good time to apply risk
10:02shorting the market is very difficult because especially crypto because of the volatility because
10:08of the way that we can get stopped out because of the way the market can spike back heavily on some of
10:13these squeezes it's a very hard market to try and you know short shorting these markets is all about
10:19timing it's all about getting the timing right being able to move in on the market at the right time
10:25and then be able to see significant downside movement away from your entry in order to support your
10:31position staying open so really what we want to start pivoting towards is thinking about well what
10:40does our future long exposure look like and how do i want to manage risk around building positions on
10:45those and i'll cover off a little bit more detail around that hopefully fingers crossed with another
10:49leg lower because that would set us up a bit you know for a nicer perspective on the higher time
10:53frames for me so if we start to see another leg lower then i will start thinking about what my spot
10:59buys will look like through these regions and then how i manage risk so i'll i'll begin to discuss that
11:04a little bit more um but at this moment in time remember it is you that applies risk management it is
11:13you that is in charge of the account there is only one person that can control the amount of risk you
11:17put on a trade and that is you if you fail to do that you will blow up and that's the harsh reality
11:25of it if you fail to apply risk if you just take it as like a yeah haha risk management yeah you know
11:31that's like it's a nice thought you will blow up it will happen you will miss the future runs because
11:38you blow up during a period where you are not getting value and it is very difficult to trade
11:43so think about your own personal levels of discipline no amount of education is going
11:52to be able to stop you from doing something stupid unless you really want to stop doing stupid things
11:57any questions on this as always just tag me and i will do my best to answer
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