 What is going on ladies and gentlemen, it is Bitcoin J. I am back today. We're gonna talk about risk Management, this is probably one of the most important most vital most Critical thing to becoming a profitable trader guys, so I Asked to for you to take out your notes and rare It's important. So if you want to be profitable You gotta watch this video. Let's get into it, man. So risk management. Let's talk about it. What is risk management in? The investment world risk management is a process of identification analysis and accept acceptance or mitigation of uncertainty in investment decisions One thing that we tend to do is think of risk in negative terms However, in the trading world risk is necessary and inseparable from desirable returns So without risk, you can't get you can't get profits. So unless you're you know Risking something you can't win with no risk. There's no winning. You know what I mean? Traders use strategies like portfolio diversification stop loss points take profit points and position sizing to mitigate and effectively manage risk All right, so that's the basics of it and then we're gonna get a little bit more into it right now, right? So why is risk management important risk management helps cut down losses? It can also help protect a trader's account from losing all or all of his or her money The risk occurs when the trader suffers a loss if it can be managed The trader can open him or herself up to making money in the market. That is so important This is why risk management is so important without risk management. You cannot be profitable. It's just not possible I know I'm rhyming but Trust me It is essential. It is an essential but often overlooked prerequisite to successful active trading After all a trader who has generated Substantial profits can lose it all in just one or two bad trades without a proper risk management strategy I'm telling you guys without if you don't practice this it You can't be profitable. That's just it's just not possible So how do you develop the best techniques to curb the risk of the market, right? Let's let's get right into it the most important thing in this That you need to get out of this Planning your trades you need to have a trading plan in order Before you ever even think about Executing the trade before you execute a trade you should have planned a trade You should never enter a trade and not know Where you're supposed to exit or where you're supposed to take profits if you enter any trades Without knowing where your stop losses and where your take profit points are you can't be profitable It's not possible again It's just it's not gonna happen And I have a lot of people in my trading group I Have a lot of people have that have come and go into my trading group because they I Give them the plan. I show them I write the plan out for them. I'm like here. Look. This is the plan This is your entry. This is where you sell if we're wrong. This is where you take profit and they won either completely miss the entries Because they don't set up entries To They don't use a stop loss. I gave them then they come back to me asking me That they're telling me that they're down I don't know how much if they should sell or hold and wait for it to come back And I'm like dude like I sold like I'm not in the trade anymore I told you where I was getting out if you didn't get out now That's up to you what you want to do, you know, it's it's out of my hands at this point I told you where to get out if you missed that I'm not in the trade You got to figure out what you want to do And there's people of course that don't take profits when I tell them to take profits. So When the trade goes up, I'm taking profits because that's what my plan says to do They don't take profits then the trade ends up going back down and now they're at a loss And they're just holding a bag, you know what I mean? And then they complain they say that they didn't make profits on that trade and I'm like, yeah You didn't take profits greed All right, so let's get into planning planning your trades man as Chinese military general Sun Zou's famously said Every battle is won before it is fought this phase this phrase implies that planning and strategy Not the battles win wars Similarly successful traders commonly quote the phrase plan the trade trade the plan Just like in war planning ahead can often mean the difference between success and failure Guys read this again man pause the video read this again Write this down in your notes write it on a sticky pad put it posted up on your computer This is so important guys. I can't tell I can't stress enough how Important this is right here Planning your trade stop loss and take profit points represent two key ways in which traders can plan ahead when trading Successful traders know what price they are willing to pay and at what price they are willing to sell They can then measure the resulting returns against the probability of the stock hitting their goals If the adjusted return is high enough, they execute the trade all right, so Stop loss and take profit points are super important because that's how you measure your trade All right, that's how you figure out your position sizing. It's how you figure out You know calculate how much you're willing to lose and all of that planning the trade Conversely unsuccessful traders. All right unsuccessful traders often enter a trade without having any idea Okay of the points at which they will sell at Whether it's profit or a loss Like gamblers on a lucky or unlucky streak emotions begin to take over and dictate their trades Losses often provoke people to hold on Okay Let's let's let's go back losses often provoke people to hold on and and Hope to make their money back All right, think about that for a second losses often provoke people to hold on and hope To make their money back guys. You should never ever trade with hopes and dreams Because that's not a plan. Those aren't numbers. You got to have numbers. You got to have a plan You got to have it laid out for you. If not emotion takes over when emotion takes over You make bad decisions. That's just how it is Or was I while profits can entice traders to imprudently hold on for even more gains People get greedy greedy is an emotion. This is why you need a plan This is why you need to know where you're getting out because if not you get greedy greeds and emotion Emotions make you a losing trader. You don't want to be a losing trader All right guys Making notice the 5% rule. All right a Lot of day traders follow what's called the 5% rule Basically, this rule of thumb suggests that you should never risk more than 5% of your capital or your trading account into a single trade So if you have ten thousand dollars in your account your risk in any given instrument shouldn't be more than five hundred dollars guys, this is this is so so so important guys like I Did not become profitable Until I learned this until I started following these rules If not, I wouldn't be telling I wouldn't be going over this if I didn't find them the most vital things you can you can find All right Now it is a 5% rule Doesn't mean you're risking 5% every trade Here we go Just because 5% is a rule does not mean that every trade you make should be at a 5% risk All right. In fact, 90% of your trades should be between the 1 to 3% range guys 90% of your trades should never go beyond the 3% range as far as risk on your capital Okay, the majority of your trades should not pass a 3% risk If you're risking more than 3% on any trade a Few back-to-back losses can really impact your overall capital, especially if you have a small account Small account to blow up quickly if you're not sizing your positions, right? All right guys The biggest thing we did we did a a challenge in 2019 we did we started in 2019 with a thousand dollars trading stock options And our the challenge was to go from a thousand dollars Showing you guys, you know on a week-to-week month-to-month basis How we were going to trade our thousand dollars and turn it into 25,000 with the members in our group So we had all these members in our group now what happened We did we wanted to do it within the 12 month period of 2019. We did not do it within The 12 month period But we did it within 13 months in 13 months We grew our account from one thousand dollars to twenty five thousand dollars strictly trading stock options. All right In our group we shared every single trade we took so this was in our stock options trade group Now what separated us from the people in our group that you know, couldn't do Profit the way that we did was that they weren't following the rules We were following the rules. So we're giving you guys a rose if you don't follow the rules, you know, you're not gonna be profitable It's just it's just Because it's a long-term game You know what I mean like in the long term if you're letting your emotions make your decisions for you You're not gonna be profitable. You might get lucky one or two times But you're not gonna be consistent and that's why we have the rules in place This strategy is common for traders who have accounts of less than a hundred thousand dollars many traders whose accounts Have higher balances usually risk even less because of the size of Because as the size of your account increases So too does the position. All right The best way to keep your losses in check is to keep the rule below 3% Anymore and you'd be risking a substantial amount of your trading account That can be hard to come back from All right, so like I said that for me personally, I'm usually between the two to three percent range That's my sweet spot. That's where I feel comfortable with my account I like to trade between two to three percent of my account now when I was doing the thousand dollar to $25,000 challenge. I had to risk a little bit more in the beginning just because there was barely any trades I could take but I still never passed the five percent rule All right, so the I was doing the five percent I was doing I was risking five percent a little bit more than I wanted to But it was very very risky. All right And I was able to get through that first part where I could you know get through to five ten thousand dollars and Then start taking go back to one to three percent for trade Um All right, where was I okay four to five percent range should only be used in under ten percent of your trades guys This can be used in trades that have higher chances of success Small accounts should try to avoid it as much as possible taking a five percent loss on a trade in a small account Hurts a lot more than a five percent loss on a bigger account now The reason for this is because on a thousand dollar account if you're taking five percent losses it It drains your capital so much more that now, you know your next trade It's gonna be it's gonna be hard if you have another five percent loss You know what I mean if you have two five percent losses in a row You know you're talking about now you're around nine hundred dollars capital And you're and now you can't pass five percent of nine hundred and if you keep Going to taking losing trades. You're gonna you're just gonna keep drawing down So it's easier for you if you if you're taking, you know, three percent trade versus a five percent loss All right setting stop loss and take and taking profits Very important guys Um, a stop loss point is the price at which a trader will sell a stock and take a loss on the trade Dude, hold on. What the fuck is going on with the music right now? There's like all sorts of shooting and shit. What the fuck? My bad guys this shit was just driving crazy. It was like all in my ear people shooting at me. I felt like I wasn't at a war She all right Um, a stop loss point is a price at which a trader will sell a stock and take a loss on the trade This often happens when a trade does not pan out the way a trade hoped The points are designed to prevent the It will come back mentality and limit losses before they escalate For example, if a stock breaks down a key support level traders often sell as soon as possible So, um, you know, there's a reason why we use stop losses You don't want to you want to minimize your losses and maximize your winners You know, so if a trade's not going your way, just take the l Accept it and move move on you get it you get it the neck and get the next one like don't don't Dwell on a losing trade. It's just another trade. You got to stop looking at these trades as money and and And you know using emote letting your emotions be involved in it That's why the amount of money that you that you're trading with Can't be a substantial amount where it affects you on your daily life or any type of money that you need Because you you need to it has to be an amount where you are not emotionally attached to it Once I figured that out and I stopped Attaching my emotions to the money. That's when I became a better trader. All right On the other hand a take profit point is a price at which a trader will sell a stock and take a profit on the trade This is when the additional upside is limited given the risk For example, if a stock is approaching a key resistance level for a large move upward Traders may want to sell before a period of consolidation takes place All right guys, this is also great if anyone's ever been in my trade room and taking any of my trades You'll notice that I always set up my my take profit zone uh areas right before resistances Usually it's like minor resistances the first two uh Take profit zones and the third one is usually right before like a major resistance And then I usually after that after that major resistance. I set up um, um A breakout entry so that We took we took profits there and if it breaks out through that major resistance Then we're just entering back into the trade All right, if it gets rejected on that resistance Then we'll be able to buy in now at a better price and make those profits again You know what I mean? So it is very important guys. You have to take profit Do not be greedy Um, how to be how to how to more effectively set stop loss points All right So setting a stop loss and take profit points is often done using technical analysis But fundamental analysis can also play a key role in timing For example, if a trade if a trader is holding a stock ahead of earning Earnings as excitement builds He or she may want to sell before the new the news hits the market if expectations have become too high Regardless of whether to take profit that the take profit price has been hit So that that's more with the stock market But even in crypto if there's any big news something coming, you know something happening. It's kind of the same thing Um, you know things will move just because of the news So it's always uh, you know by the news by by the rumor sell the news type thing, you know Um, moving averages represent the most popular way to set these points as they are key As they are easier to calculate and widely tracked by the market Key moving averages include the five nine 20 50 100 and 200 day averages These are best set by applying them to a stocks chart and determining whether the stock price has reacted to them in the past As either a support or resistance level So that's why we use moving averages on our charts If you ever see our charts, we have Usually about four or five moving averages on them These are the the numbers that we use here Um, you know when when using when trying to figure out where you're taking profit You have to look at the history and see where the stock had trouble and why it had trouble You know, where was the resistance? Why was it resistance? And that's how you can kind of figure out if the moving averages play a role in any in any of those as far as supporting resistance Another great way to place a stop loss or take profit level is on support or resistance trend lines These can be drawn by connecting previous highs or lows that occurred on significant above average volume Like with moving averages The key is determining levels at which the price reacts to the trend lines and of course on high volume So same thing guys, um, you know, anyone who's traded with us They know that we use support and resistance lines. Those are the key things that we use Together with the moving averages So and that's how we figure out our entries our stops and our take profit points very important to learn these things These are very very simple Things that you can learn There's many tutorials out there on this and we will be getting to some tutorials covering all of these as well When setting these points here are some key considerations Use longer term moving averages for more volatile stocks to reduce the chance that a meaningless price swing will trigger a stop loss order to be executed So this is basically uh saying, you know, um, don't get wicked out A lot of times prices are going to, uh What you call stop hunting they're gonna hunt for Key areas where they know a lot of people are probably Setting stop losses and they're going to hunt for those and they're going to execute those They're going to trigger all those stops and then the price is going to pump I'm sure if you've been on the market long enough, it's happened to you um, so this is basically telling you telling you to Use wider stop losses Where it makes sense, you know what I mean Adjust the moving averages to match target price ranges For example, longer targets should use larger moving averages to reduce the number of signals generated Stop losses should not be closer than 1.5 times the current high to low range Which is the volatility as it is too likely to get executed without reason. So the same thing Um, you don't want to have your stops too close because you're going to be getting, uh Stopped right before move up Adjust the stop loss according to the market's volatility if the stock price isn't moving too much then the stop loss points can be tightened So as as, uh, volatility slows down And that happens usually with a lot of consolidation and right before a move is coming You can move up your stop your stop losses And make them a little it's a little bit tighter diversify guys Making sure that making sure you make the most of your trading means never putting your eggs in one basket If you put all your money in one stock or one instrument, you're setting yourself up for a big loss So remember to diversify your investments not only does this help you manage your risk But it also opens you up to more opportunities. So I mean that speaks for itself guys. Don't put all your eggs in one basket um Always diversify always have you know, um a good pool Of different investments where you're putting your money Roles keep emotions out of trading decision You got that rules keep emotions out of trading decisions. You do not Want to make decisions based off of your emotions That's why you always want to have a trading plan. You always want to have all these rules set already in stone before You enter and execute a trade Managing emotion is the most difficult part of trading It is a it is a truism in the trading world that a successful trader can give their system to a rookie And the rookie will end up losing all of their money because they can't keep emotions out of the trades That means they can't take the losses when the trading system says get out And they can't take the wins either because they want to hold on for bigger gains guys That is so so so important right there. I don't know if you guys understood that That's basically proving exactly what I've seen hundreds of times. All right um When you have a trading group that people join Um when you when you win when you have winning trades most of the time You know, they're just silent about it. You know what I mean The it's like it's expected like yeah, it better be a winning trade. You know what I mean Then as soon as there's a loss people go fucking ape shit and they go nuts um And of course I get bashed all the time for it um Now the the main reasons why why people lose is because they don't follow the rules You know, I ask them. All right. Um, they they hit me up all the time with the same It's always the same common things that they didn't you know, they didn't set their stop loss um, so now they're hold they're they're holding a bag for I don't know how how much How much further down and they want to keep holding Um, or they're not taking profits. So they end up losing when the trade goes reverses So man, this happens so much guys if you guys just follow these rules Always use stop loss always take profit. You'll see you'll see what a difference it makes Like it's crazy That's why adopting a proven Trading strategy and following the specific rules determined by that strategy are vital to success Get into the trade when the system tells you to and get out the same way Don't second guess the system guys I put the system in place for so many people and people just second guess it time after time After time after time Guys, I've been trading for a very long time There's a reason why my system is in place. There's a reason I follow it and there's a reason why I'm profitable and it works um You know our trading group's been open for over three years and I've been trading um for over six seven years something like that Guys, I know what I'm talking about. You know what I mean? The bottom line Traders should always know when they plan to enter or exit a trade before they execute By using stop losses effectively a trader can minimize not only losses But also the number of times a trade is exited needlessly In conclusion make your battle plan ahead of time. So you'll already know That you've won the war Hope y'all got that If you guys got any questions, leave them in the comments guys Um, I'm always happy to help I will be posting more videos guys subscribe Hit the alarm so you're notified when I when I'm posting up the videos and um Let's get it man. I hope you guys really learned and took something out out of out from this I put a lot of time into this to make sure that I could bring it to you guys in a simplified manner And try to make the most sense of it as possible for you guys Alrighty guys. I'm out of here