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Module 02 · Workflow

A four-part review that protects capital before emotion gets involved

The best risk process is the one you can execute under stress because it was defined in advance.

Step 01
Pressure-test assumptions before deployment

Ask what market condition would make the strategy wrong, how much damage is acceptable, and whether the live environment can surface those signals quickly.

Step 02
Write hard stop conditions

Define the drawdown, technical failure, or behavior drift that ends the strategy's right to keep trading.

Step 03
Limit exposure like the thesis might be wrong

Even good systems fail. Capital allocation should assume uncertainty rather than reward confidence.

Step 04
Review and retire decisively

When evidence says the system no longer fits its environment or its risk budget, close it. Replacement beats denial.

In this lesson
  • Pressure-test assumptions before deployment
  • Write hard stop conditions
Try it — trailing stop

A trailing stop ratchets up as price rises and only ever moves in your favour. Set the trail distance and see where it would have locked in the move on this sample path.

Peak
—
Exit
—
Locked gain
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The page to remember

Do not let recent outcomes rewrite your risk standards.

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