top of page
Thinking About Initial and Primary Risk
Initial Risk & Primary Risk
The problem with running setups is not that you cannot identify profitable setups.
The main issue can be actually putting money on the line and risking loss. You find many people with demo accounts can go on huge win streaks. Where as real trading? They cannot match it. They cannot match it because fear completely fucks up a simple process. So. We need to get rid of this fear whilst being able to run trades. There are many techniques to help. But this is just one of them.
Think About Risking A Small Amount Initially:
If entering a setup, one can either put a full size risk...OR enter with a small amount of risk. Then add as the setup gives them more confidence. When we say 'add on risk' we mean put more money inside. As setups should be measured in terms of what we risk, FIRST.
By using initial risk, it can it much easier to 'get into a position'. Because...of course. The loss is going to be so small, the initiation is easy. Essentially; something that may stop many players from getting into a position is that it scares them to get stopped out.
But what then if your loss is so small that getting stopped out is something you can actually deal with?
Do not ignore this question. Fear is what ruins the objective process and fucks the trade up. By risking something you are seriously comfortable with - helps. You can always add size after.
In-fact as a rule of thumb if you play with smaller position sizes; your gains will come more slowly but you may find more steadily.
So step one: Initiation.
Results? You have a position. Now you can build on that position. Example below:
'settle the itch to get a position in a stock that doesn't stay in one place to long' or 'enter into a setup pre breakout'
This is the key. Example below:
In this way - losses can be consistently controlled, fear can be dissolved, setups can be really squeezed.
Here we put your initial risk can be 1/4 of your play. Once the trade moves in your direction and breaks a key level, risk can be added on by another 2/4. Once the trend is in full motion, risk can then be added fully.
Primary risk can be used in the case where an asset is so beautifully poised that one can enter both with great conviction & with full size.
This can often be on a retest of a big breakout or on a A star play book trade.
In any case, initial risk and primary risk is a reccomended strategy for most plays.
bottom of page