Risk Management in Day Trading — Full Breakdown & Transcript

[00:02] And I am Ricardo. And why? Why does the market hate me? have debts registered with Serasa (a Brazilian credit bureau). Yeah, let me guess. He went all-in on the mini-index, and when it was time to

[00:17] stop out, you held your finger there and let it drop further down. It is not? But in reality, it's not my fault; it's the fault of the big players who are constantly hunting for my stock. No, it's your fault for not having

[00:29] risk management. And today we're going to teach you the one thing that's stopping you resumes. And that's how we'll become millionaires. So, definitely. No, the secret is not to become poor. In day

[00:44] trading, this is already profit. So, roll the intro before you mortgage your house. intro before you mortgage your house. Oh, damn.

[00:58] you're the big shot at risk management. It's like a seatbelt, is n't it? It's like going to war. Imagine you are a soldier and your money is If you use up all your bullets firing into the air in the first minute, then

[01:12] what happens when the enemy shows up? We'll throw the helmet at him. That Yeah, you throw your helmet off and then you die right after, right? No trading is the same. If

[01:27] you lose 50% in a single trade, you know how much you need to recover to get back to break even. Okay , that's easy. Mathematics is my strong suit, it always has been. It's 50%. You were wrong, Einstein. If you have R$500 and lose 50%,

[01:43] how much will you have left? You'll have R$250 left over. And to turn R$250 back into R$500, turn R$250 back into R$500, you need to make a 100% profit, meaning you to zero. Supplementary. Supplementary course. So wait, are you

[02:01] telling me that losing is much easier than recovering? Oh, exactly. Therefore, the number one rule is capital preservation. You're not here to make money today. You are here to survive and to be able to

[02:15] operate the next day. Okay, I understand. Still using the war metaphor, it's important to save the bullets for the battles to practice? I see a chart and my trading hand starts to tremble.

[02:28] Yes, you need to set three things before clicking the button again. If you don't do that, you're a gambler, not a trader. The stop loss is the maximum amount you are willing to lose on a given trade. That's it,

[02:41] oops, that's enough, I can't take it anymore. The stop-loss order must be technical, not financial. Okay, but where do I put the stop button? Well, I'm going to enter 100, 200 contracts, because I want to make a lot of money.

[02:54] Yeah, calm down, Uncle Scrooge. That's not how it works either, is it? Leverage is what kills the trader. As a golden rule, you should never trade more than a maximum of 2% of your capital in a single trade.

[03:06] Oh, but is that all? With this, I'll earn very little. It's not even worth it. And he will live a long time. If you risk 2% per trade, you could lose up to 50 times in a row. Are you capable of that? Man, a machine,

[03:22] a caged beast filled with hatred. He did it again. He did it again, one more time. And the third point is risk versus return. You only get into a fight if it's

[03:37] worth it. So how worthwhile would it be? In trading like this, ideally you should look for two-to-one trades, or even three-to-one, which would be the best-case scenario. In other words, you risk

[03:49] losing 100 to win 200 to 300. No, but if I lose half, at ahead, right? Yes, hallelujah. Finally, you understood. That's right. If you're right 40% of the time, but win three times more

[04:05] problem you're creating is this: you're willing to lose 500 to gain only R$ 50, which is just enough money for a coffee. That's crazy math. The stop day is the maximum loss limit for a day. When you reach that amount, turn off your

[04:20] computer and go for a walk with the dog. Exit the screen. When you lose money, your brain goes into a fight-or-flight paranoia. That. We have a video here on the channel, just click here, called the Zeigarnic effect. Take a look at him,

[04:35] I'm sure you've never heard of him, but you do it all the time. And not just for traders, you know? It's for any time of day. And by acting this way, you won't recover. You're going to dig a hole in the ground until you reach

[04:47] So you're saying to avoid resale trading. Okay, fine. The truth is, there was one time I traded with R$ 200, lost R$200, then kept trading because I knew I would recover, and guess what, I lost R$2,000

[05:00] recover, and guess what, I lost R$2,000 and ended up owing that entire amount to the sell my PlayStation. Yeah, you see the management? Yeah, you see the management? Sold FIFA.

[05:15] Risk management protects you from yourself. Set a daily loss limit and also set a daily profit limit, which is your goal. You can do that within your platform; it's possible to do that within Profit. So,

[05:30] the goal was reached, bye, thank you. And it worked. That's it . And here at Profit, we're going to show you how to do this risk management. So we click here on studies, go to study settings, and down here

[05:43] study settings, and down here we have negotiation and risk management. This is the screen where we'll be able to defend ourselves, right? Then you can choose the total loss in the larger account, where you can put in how much you

[05:59] could afford to lose. Remember that he won't let you trade again, but he'll continue with that one trade, okay? You still have to set the stop loss, the profit margin have a daily target, right, which is

[06:13] extremely important, and you also have the option to edit the drawdown. Well, I think this one is very important, it's a series of losses, right? Regarding important for you to mention them, especially if

[06:26] you're starting out or in that intermediate phase. You think you're getting good and then you become very arrogant, thinking, "I can do everything alone, everything on my own," and then comes the fall, right? So be very careful and

[06:39] important tools; defense is better than offense. In this case, I want to set a limit on the number of transactions per day. In this case, there are five, right? This example is also very interesting. Depending on your strategy, it's also very good to

[06:53] choose until what time you will trade or start trading, because depending on the time of day, the trend is much stronger. So it largely depends on your operation to know whether or not it's worthwhile to

[07:07] activate this option, OK? It's also very interesting to enable this editing block in your settings. Why is that interesting? Because it will prevent you from doing, oh, no, let me unlock it here, I'll just do one more little operation

[07:22] and then I'll come back and lock everything again . Well, that's not working. That's when you run away, that's when you get into that Zigarnic effect of yours . Here, in this section about preventing operational errors, that's literally what it 's talking about. So you

[07:35] set a limit on how much you can trade, send, right, per order, the maximum time you can stay in a trade in a given asset, and also the maximum financial limit for your position in an asset. I don't know if it would be very useful, but it's good,

[07:49] right? Anything that offers protection is good and very welcome for a trader. If you didn't understand any item in this option above, Profit itself provides a video explaining each item step by step. So if

[08:04] you also want to comment here with us or send a direct message on Instagram, we are also willing to help in any way we can, but there's also a video from the platform itself. Summary of the opera. Stop-loss orders are essential, and

[08:18] leverage can become poison if you overuse it. And what if you hit your stop loss or even your stop game there? Go take the dog for a walk, go play a video game, if you still have one and haven't sold it to pay the

[08:33] The financial market is a marathon, not a 100-meter sprint. He who survives wins; he manages the risk, and profit will take care of itself. Yes, and that's it. Don't forget to like our video, subscribe to the

[08:48] channel, and turn on notifications so you don't miss our next videos. Take a look at our previous videos about important for you, the trader, to avoid making basic mistakes, and especially

[09:03] comment here that you will start using stop-loss orders effectively and will stop this madness without risk management. In other words, write here: "I swear I 'll use Stopit, right? See you in the next video."