The Wall Street Coach with Kim Ann Curtin EP 97: Why Most Traders Fail at Risk Management
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Jun 22, 2024 Brian Lee, an experienced trader and educator, returns to share crucial insights on risk management that many traders overlook. He dismantles the myth that high risk is essential for high reward, discussing the importance of position sizing and managing drawdowns. Brian emphasizes the need to control losses and prepares traders for inevitable slumps. He highlights the power of sharing struggles within the trading community, which fosters connection and growth. A practical guide to building a risk methodology is also shared, aiming to enhance traders' confidence.
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Risk Is Always Present
- Risk is always present regardless of experience and can wipe out gains quickly through geometric losses.
- Small percentage risks compound reliably while oversized risks make recovery exponentially harder.
Commit To Your Position Size
- Do commit to a position-sizing rule and stick with it rather than varying risk mid-strategy.
- Changing your risk after a loss forces much larger wins to merely break even.
Learning Risk Early Changed His Path
- Brian paid for education early and learned risk concepts like R that reshaped his trading.
- He still sees traders across asset classes apply R successfully to manage money.