🛡️ Level 4: Risk & Survival
This is where the game really begins. Every trader has winning trades. Only the disciplined ones survive the drawdowns.
🎯 Objective
Learn how to stay in the game by controlling your risk and protecting your capital.
- Understand how to size positions relative to account size and risk tolerance
- Learn about stop losses, risk/reward ratios, and capital preservation
- Develop emotional habits for surviving slumps, drawdowns, and overconfidence
🔍 Terms to Know
- Risk per Trade: The dollar amount you're willing to lose on a single trade
- Position Size: The number of shares/contracts based on your risk level
- Drawdown: The decline from a peak account value to a low
- Risk/Reward: The ratio of potential gain vs potential loss
- Stop Loss: A predetermined price to cut the trade if it goes against you
- Max Daily Loss: A rule that tells you when to stop trading for the day
Track all of this inside the Disciplined Trader Journal.
📚 Wisdom from the Greats
- “The most important thing is to play great defense.” — Paul Tudor Jones
- “In the long run, you’re trading your beliefs, not the market.” — Mark Douglas
- “I always sell down to the sleeping point.” — Jesse Livermore
Risk management isn’t about being cautious — it’s about staying alive long enough to get lucky.
🧠 Why This Matters
- Most traders blow up not from one trade — but from not knowing when to stop.
- Capital is your freedom. If you lose it, the game is over. If you protect it, you're always in the game.
- Confidence comes from survival. Every risk rule you set is a vote for your future self.
🎮 Your Mission
Build a personal risk profile and test it live.
- ✅ Set your max risk per trade (start with 1% or less)
- ✅ Use the calculator in the journal to size a position
- ✅ Define a stop loss and risk/reward before entering
- ✅ If hit your max daily loss — stop. No revenge trades.
- ✅ Log your emotions when losing — do you spiral or stay calm?
Survival isn’t optional. It’s the whole game. Master this level and you’ll outlast 90% of traders.
Almost there — Choose your battlefield →
