1. Risk Management

2. Definition
The forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact.
The process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions.
Essentially, risk management occurs any time an investor or fund manager analyzes and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given his investment objectives and risk tolerance.

3. Risk Tolerance
The degree of variability in investment returns that an investor is willing to withstand
Conservative Risk Tolerance (5% or less)
Moderate Risk Tolerance (6-9%)
Aggressive Risk Tolerance (10+%)

5. What risk % am I comfortable with?
Every single trader has a different risk tolerance...Some more than others.
The most conversative traders use >1 %
My recommendation for everyone is 3% or less risk
I commonly use 3-5% Risk

6. How to calculate your risk
What percentage of my total account balance would be lost if my stop loss gets hit?

7. Account Balance: $1,000
Using a 20 pip Stop Loss
1% Risk = 0.05
3% Risk = 0.15
5% Risk = 0.25
10% Risk = 0.50
20% Risk = 1.00

8. Account Balance: $2,000
Using a 20 pip Stop Loss
1% Risk = 0.10
3% Risk = 0.30
5% Risk = 0.50
10% Risk = 1.00
20% Risk = 2.00

9. Account Balance: $4,000
Using a 20 pip Stop Loss
1% Risk = 0.20
3% Risk = 0.60
5% Risk = 1.00
10% Risk = 2.00
20% Risk = 4.00

17. Market is Fluid so must you be
Adjust Lot size depending on pair but always keep risk management in mind.
Some trade setups are better than others, so depending on your risk tolerance you can always be more aggressive.
Depending on your style of trading you will need to adjust your risk. -Scalpers are usually high risk but quickly enter and exit positions Intraday Traders can have moderate or conservative risk tolerance -Medium Swing to Long Term traders are usually more conservative

18. Risk Tolerance Conservative Risk Tolerance (5% or less)
Moderate Risk Tolerance (6-9%)
Aggressive Risk Tolerance (10+%)