Risk and money management is a concept crucial to any traders arsenal. It will create a trading environment where you can be “wrong” on more than 60% of your trades but still make your NAV (Net Asset Value) grow.

The basic principles are to minimize losses, but also risk more when the probabilities are skewed in your favor (using our unique 5 Star Rating system).

Let’s start with the actual closed trades in the Trade Tracker (also includes Swing Trades). About 60% are closed at a loss, while 40% at a gain. Yet don’t be alarmed, this is actually quite normal.

The key is that using our Star Rating system, we risk less % of our NAV on lower ranked instruments (1-3 Stars), while we risk a greater % on the 4 and 5 Star Ratings. See the chart below which illustrates the effects of the applied risk and money management protocols. Gains outweigh the losses by a factor of about 8 to 1.

So far we have closed 65% of our +70 total positions. Average holding time is about 200 days. The high yielding instruments were Star Rated 5. See how a Star 5 generates a higher avg P/L (profits and losses) per trade (100K NAV) than all Star Rating 1-4.

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