🛟Risk Management

Good to know: Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings. These risks can stem from various sources, including financial uncertainties, legal liabilities, strategic management errors, accidents, and natural disasters. Effective risk management ensures that an organization can minimize potential losses and capitalize on opportunities.

A1TradeHub risk management strategy:

1. Wait for Setup: Only enter trades when your predefined criteria or setup is met ( A1TradeHub Rules ) -

2. Winrate of A1TradeHub is 75% to 80% Winrate

3. Position Size: Each options trade should involve around 4% to 5% of your total account balance.

4. Stop Loss: Set an automatic stop loss to exit the trade if it reaches a 18.68% loss.

5. Profit Locking:

   • Secure your position once it reaches over 20% profit by moving stoploss to break-even

   • Secure your profits when matching over 38% ( Trimming All or 1/2 position and moving stoploss to +20% profit)

   • Continue securing profits incrementally as the trade reaches 40% to 50% profit.

6. Trade Limit: Limit your trades to no more than 6 orders per day.

This revised strategy ensures clear steps for entry, profit-taking, risk control, and daily trade limits.

Implementation Example:

Let's analyze the provided trading scenario with the following details:

• Capital: $33,000

• Risk Per Play: 4% of capital

• Stop Loss: -18.68%

• Take Profit: 38.68%

• Win Rate: 75% to 80%

• Number of Plays per Day: 4

• Number of Trading Days per Month: 22

Initial Setup:

• Risk Per Play: 4% of $33,000 = $1,320

Stop Loss and Take Profit Calculations:

• Stop Loss Amount: 18.68% of $1,320 = 0.1868 * $1,320 ≈ $246.38

• Take Profit Amount: 38.68% of $1,320 = 0.3868 * $1,320 ≈ $510.58

Monthly Plays:

• Total Plays per Month: 4 plays/day * 22 days/month = 88 plays/month

Win and Loss Distribution:

• Wins: 75% of 88 plays = 0.75 * 88 ≈ 66 plays

• Losses: 25% of 88 plays = 0.25 * 88 ≈ 22 plays

Profit and Loss Calculation:

• Total Wins: 66 plays * $510.58 ≈ $33,698.28

• Total Losses: 22 plays * $246.38 ≈ $5,420.36

Net Profit:

• Net Profit: $33,698.28 (wins) - $5,420.36 (losses) ≈ $28,277.92

• Account Growth:

• Account Growth: $28,277.92 / $33,000 ≈ 85.69%

Summary:

• Initial Capital: $33,000

• Net Profit: $28,277.92

• Final Capital: $33,000 + $28,277.92 = $61,277.92

• Monthly Account Growth: 85.69%

Conclusion:

With the given parameters (4% risk per play, -18.68% stop loss, 38.68% take profit, 75% win rate, 4 plays per day, 22 trading days per month), the strategy results in approximately 85.69% account growth in a month. This is a very high growth rate and suggests that the strategy is highly profitable under the assumed conditions. However, it's important to consider the feasibility and sustainability of such a high growth rate, as it might involve significant risk and market variability.