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Risk Budgeting Across Strategies and Accounts

If you trade more than one approach, or hold several accounts, you need a total risk budget, not just a risk per trade.

Define the maximum amount you are willing to lose in a given period, such as a month, across everything. For example, 6 percent of total capital. Then allocate it. A swing strategy might get 3 percent, an intraday strategy 2 percent, and 1 percent might be held in reserve.

Within each allocation, set the risk per trade, the maximum open risk, and the loss limits. The sum of maximum open risks should not exceed the total budget on a day, unless the strategies are truly uncorrelated.

Consider correlation. A trend strategy and a mean-reversion strategy may offset one another, so their combined risk can be lower than the sum. Two strategies on the same pairs may be highly correlated, and should be treated as one for risk purposes.

Adjust over time. If a strategy performs poorly, reduce its allocation. If it performs well and shows stable results over a large sample, consider a modest increase, after review.

Account structure matters too. Funded accounts, personal accounts, and different brokers each have their own limits. Track total exposure across all of them in one place.

A spreadsheet that lists each account, its open risk, and the day's results provides a consolidated view.

Practical step: write your monthly total loss limit, and divide it among your strategies or accounts.

Funded accounts are easy to forget in this. If you trade the same setup on a prop account and a personal account, that's one risk, even if it's two logins. Say you risk 1 percent on your own 5,000 dollar account and 0.5 percent on a 50,000 dollar challenge, both long EURUSD from the same level. That's 50 dollars plus 250 dollars on one idea, and if it fails both accounts take the hit at the same moment. The prop loss isn't your cash, but the challenge fee is, and a failed challenge is a real cost. I count both in the same daily sheet so the total exposure is visible.

A one-page sheet with every account's open risk at the start of the day is enough. It doesn't need to be fancy, it needs to be in one place. Columns for account, pair, direction, risk in dollars and risk as a percentage of total capital across everything. Add a line at the bottom for the total and another for net exposure by currency, since long EURUSD in one account and short USDCHF in another are both dollar shorts. Update it whenever you open or close something. If the total goes above your daily limit, no new trades until something closes or moves to breakeven.