Set risk budgets, size positions, evaluate portfolio exposure and drawdowns, and document risk decisions.
What it teaches
Which risks you control and which you only absorb, and how a planned loss is stated before entry; the account risk budget across the trade, the open book, the day and the week. The single trade: fixed-percentage risk and what it does to account decay, the stop that sits where the thesis is invalid, and the size that makes that distance affordable. The arithmetic of a sequence — R-multiples, expectancy with costs in it, drawdown and its recovery requirement, and risk of ruin. What moves the plan without asking: volatility and ATR, gaps, slippage and thin liquidity, leverage and margin, correlated and concentrated exposure, and options risk including assignment and undefined-risk positions. Daily and Weekly Risk Limits sets the hard daily and weekly limits, and Trading Risk Plan turns all of it into one testable specification.
Who it is for
Anyone who can find a setup and cannot say what it is allowed to cost. It assumes you can read a chart, place a stop and tell a call from a put; it assumes nothing about expectancy, drawdown mathematics, margin mechanics or correlation. It also suits the reader who has been sizing positions by round numbers of shares and has quietly noticed that a wide stop and a narrow stop then risk wildly different amounts — the course is explicit that size is an output, computed from the risk you allowed and the distance to invalidation, and never an input you pick first.
Concept dependencies
Account Risk and Risk Budget defines the budget that Risk Per Trade spends. Stop-Loss and Structural Invalidation defines the distance that Position Sizing divides by. R-multiples are the units of expectancy. Losing Streaks and Drawdown provides the drawdown context that makes Risk of Ruin a number rather than a worry. Execution risk distinguishes the loss planned from the loss actually taken. Trading Risk Plan asks for account limits, sizing, execution constraints, portfolio exposure, options rules and review triggers; those dependencies explain the concepts it draws on.
Where the definitions come from
The labs are simplified on purpose, so each lesson closes with an official reading link to a primary source rather than to a vendor selling a risk calculator: CME Group's education material for trade and risk management, contract multipliers and controlling risk; FINRA for risk tolerance, brokerage and margin accounts, day-trading requirements, diversification and options; the SEC's investor.gov for order types, asset allocation and its bulletins on volatile markets; and OCC's OptionsEducation.org for exercise and assignment. Those are definitions from the exchange, the regulator and the clearing house — the course's own synthetic examples are illustrations of them, never a substitute.
Every lesson still works with no network at all. Each page is entirely self-contained, and the reference links are the only things on it that point off the site.
Lessons
Explanations, examples, interactive tools, and practice questions.
16 lessons
Educational use only — nothing here is trading advice.
This course teaches trade, account, execution, leverage, portfolio, and
options risk controls. It does not provide live market data,
personalized risk limits, trading signals, execution access,
profitability claims, or investment advice. Real outcomes depend on
instrument, venue, broker, liquidity, taxes, fees, margin rules, and
market conditions. Historical strategy validation is reserved for
Backtesting and Trading Systems, and automation and live workflow design for Algorithmic and Automated Trading.
Data and calculation scope. All charts, trade
sequences, Monte Carlo paths, option payoffs, and portfolio shocks in
these lessons are deterministic synthetic examples. The course uses
stated conventions — fixed-percentage risk is applied to current
equity, so dollar risk decreases during drawdown; recovery gain is
calculated as 1 / (1 - drawdown) - 1;
position size is rounded down after entry-to-stop distance, multiplier,
and slippage reserve are included; expectancy is
win rate × average win − loss rate × average loss − average cost;
the risk-of-ruin output is a simplified Monte Carlo estimate under
user-selected assumptions and is not an exact forecast; leverage
examples use user-selected maintenance requirements for education, and
actual broker and product requirements vary; and options examples use
standard 100-share equity-option multipliers with simplified payoff and
sensitivity estimates.
Lesson topics
Foundations and the risk budget
Risk Management Fundamentals and Account Risk and Risk Budget define the planned-loss distinction and the budget used by the risk controls: market uncertainty is not account damage, and the only quantity you actually set is the loss you planned before entering. The budget that loss comes out of — one figure divided across the individual trade, everything open at once, the session and the week, so that no single decision can quietly commit the whole account.
Sort a trade's variables into the ones you set and the ones you absorb, state the planned loss in dollars before entry, and separate market uncertainty from account damage.
Allocate risk across individual trades, open positions, daily limits, and weekly limits without exceeding the account risk budget.
Open lesson
Not marked
Lesson topics
Sizing one trade
Risk per trade fixes the amount. The stop fixes the distance, and it is placed where the idea stops being true rather than where the loss feels tolerable. Size is then the only quantity left to solve for — which is why it comes last, and why picking a round number of shares first quietly decides the other two for you.
Calculate shares or contracts from account risk, entry price, stop price, contract multiplier, and estimated execution cost.
Open lesson
Not marked
Lesson topics
Outcomes across a sequence
One trade tells you almost nothing; a hundred of them tell you what you actually have. These lessons convert results into a unit that survives changing account size and instrument — the initial risk, R — then build the four numbers that describe a sequence: expectancy with costs inside it, the drawdown a perfectly normal losing streak produces, the gain required to undo that drawdown, and the probability that a run of them ends the account rather than dents it.
Estimate how strategy expectancy, payoff, risk per trade, and sequence variance affect the probability of crossing a failure threshold.
Open lesson
Not marked
Lesson topics
Market and execution reality
A planned-loss calculation can assume the loss you planned is the loss you take. Volatility, execution and leverage risk require examining that assumption. Volatility changes what a sensible stop distance even is, so the same account risk buys a different position from one week to the next. Gaps, widening spreads and thin books fill you somewhere other than your stop. And leverage decides how much of the account a given price move reaches — buying power tells you what you are permitted to hold, never what you can afford to lose.
Compute how far a price move reaches account equity through leverage, check a position against a maintenance requirement, and say why buying power is not a risk limit.
Open lesson
Not marked
Lesson topics
Exposure beyond one position
Risk that was counted correctly one trade at a time can still be counted wrong in aggregate. Five positions that share a sector, a market or a factor are one position wearing five tickets, and stress is exactly when they admit it. Options add a second way for the arithmetic to break: premium is not the only thing at stake, expiration and assignment create exposure you did not choose, and some structures have no floor under the loss at all.
Compare premium risk, assignment exposure, expiration behavior, volatility sensitivity, and defined versus undefined option risk.
Open lesson
Not marked
Lesson topics
Limits and the written plan
Every risk control is a decision made in advance. Daily and Weekly Risk Limits and Trading Risk Plan make those advance decisions binding. Hard session and weekly limits are the only ones that hold after a bad morning, because they are the ones you are not entitled to re-evaluate while losing. Trading Risk Plan combines the controls into a single written specification — account limits, sizing, execution constraints, portfolio exposure, options rules and review triggers — precise enough that another person, or a program, could apply it the same way you would.
Combine account limits, position sizing, execution constraints, portfolio exposure, options rules, and review triggers into one testable risk specification.
Open lesson
Not marked
Recommended background
Chart reading, stop placement, and distinguishing a call from a put are assumed. No knowledge of expectancy, drawdown mathematics, margin mechanics or correlation is assumed.
Interop
Trading Risk Plan exports a risk plan
The Trading Risk Plan lesson documents a risk plan. It turns every limit you set into explicit fields, checks them against each other, and then hands the whole plan back to you as a file, so it can outlive the browser tab it was written in.
Format: trading-risk-plan-v1
What comes out of it
Trading Risk Plan takes the account limits you chose — reference equity, risk
per trade, maximum open risk and maximum gross leverage — the daily,
weekly and maximum-drawdown loss limits, the portfolio constraints on
concurrent, correlated and single-sector exposure, the execution
constraints for slippage reserve and scheduled events, the options
rules covering undefined risk, closing short options before
expiration and assignment buying power, and the actions you decided
to take when a limit is reached, and exports the whole specification
as a JSON document stamped
trading-risk-plan-v1.
The schema linked beside this is the contract for that shape. It is
worth reading if you would rather keep your limits in your own
notebook or script: match the shape and the same fields carry over.
Note what the export deliberately does NOT contain: any measure of
what the plan earned. There is no performance object anywhere in the
shape, and every percentage in it is a constraint you set, not a
result — so a plan that is merely well specified is never mistaken
for one that has been shown to work. Validation is Backtesting and Trading Systems's
subject. Everything runs in your browser — nothing is uploaded, and
there is no account anywhere in this course.