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A structured trading curriculum across stocks,
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  • 08Build Your Trading System

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Home>Courses>Risk & Money Management>Lesson 6 of 7

Money management and diversification

Managing your whole account, not just single trades.

Risk & Money Management·Lesson 6 of 7

All lessons

By the end of this lesson you'll be able to:

  • 01Define money management
  • 02Explain total exposure across trades
  • 03Protect against a losing streak
1

Step 1 · Read the guide

Read the guide first

Everything the quiz asks is covered in the linked guide. Read it, then answer the questions below.

What Is Money Management in Trading? A Beginner's Guide
Key terms
Money ManagementRisk ManagementDrawdownDiversification

Step 2 · Take the quiz

Quick check

10 questions

Answer all 10, then check. Wrong answers show a hint and a link back to the guide.

  1. Question 01

    What does money management focus on?

  2. Question 02

    If each of ten open trades risks 1 percent, your total risk can be:

  3. Question 03

    You have 5 open trades each risking 2%. Your total risk can be up to:

  4. Question 04

    You hold four long positions in highly correlated tech stocks. What is your real risk?

  5. Question 05

    What does averaging down mean?

  6. Question 06

    Why is adding to a losing position to average down risky?

  7. Question 07

    What should you track across your open trades?

  8. Question 08

    Even at 1% per trade, what could opening 15 correlated positions at once do?

  9. Question 09

    After a 20% drawdown, what does reducing your position size until you recover do?

  10. Question 10

    After a drawdown, what is a sensible move?

Answered 0 of 10 · pass 70% (7/10) to complete

Risk & Money Management6 of 7
  1. Risk management fundamentals
  2. The risk-reward ratio
  3. Position sizing
  4. Stop loss and take profit
  5. Max drawdown and risk of ruin
  6. →Money management and diversification
  7. Performance metrics: win rate, Sharpe, Sortino
  8. ⚑Final Assessment· 20 Q