MODULE 03 · LESSON 2 · 8 MIN
Account Budgets & Exposure Rules
Goal: Set portfolio-level limits so no cluster of trades can do what no single trade can.
Per-trade sizing protects you from one bad trade. It does nothing against five mediocre ones at once. Portfolio rules are the second wall.
The three budgets
Concurrent positions. Cap how many positions can exist at once. Three is a sane desk default. Every position is attention spent — and correlated crypto positions are secretly one big position wearing masks. Three BTC-beta longs is one 3x-sized long with extra steps.
Total open risk. Sum of all live dollar-risks, capped as a % of account. If per-trade risk is 1% and the cap is 3%, a fourth setup waits for a slot — no matter how it scores. The cap is the cap.
Direction concentration. All positions pointing the same way is a bet on one market event. Fine when chosen consciously; fatal when accumulated accidentally. Know your net lean at all times.
Budgets are admission control
The budgets exist BEFORE any signal does. A signal does not ask "is this good?" — it asks "is there room on the book?" When the answer is no, the answer is no. The next signal always comes; blown accounts do not regenerate.
The weekly reset
Once a week, flat or not, audit: positions vs cap, open risk vs cap, net lean, and whether any rule bent. Ten minutes. The audit is what keeps the rules real instead of decorative.
Takeaways
- ▸ Three budgets: max positions, max total open risk, direction concentration.
- ▸ Correlated positions are one big position in masks — count them honestly.
- ▸ Budgets are admission control: no room on the book means no, regardless of score.
Checkpoint
Answer all questions correctly to complete the lesson. Misses reset for another pass — no penalty.
1. 3 longs on highly correlated coins ≈
2. Total open-risk cap is hit. A LEGENDARY fires. You:
3. The weekly audit exists to: