Risk Tolerance VS Risk Capacity

via SMB Capital – Day Trading Blog:

To be successful at trading, long term, it’s extremely important that our risk tolerance is in line with our risk capacity.

Risk “tolerance” has to do with the amount of draw down we can withstand prior to the loss psychologically effecting our trading.

Risk “capacity” has to do with the amount of draw down we can withstand prior to the loss creating a real problem with our finances.

As a trading performance coach, I’m regularly coaching some traders to increase their risk tolerance while coaching others to bring their risk tolerance down to a responsible level.

Some traders have a very high risk tolerance. Read more [...]

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SMB Capital – Day Trading Blog

Risk Tolerance VS Risk Capacity

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