Risk Management
Simple, practical rules to protect your capital every week.
Core Rules
Small Capital Allocation
Never risk your entire account on a single idea. The strategy allocates capital equally across up to 10 positions, keeping each position small relative to the total.
Equal Split
Every position gets the same dollar amount. No outsized bets, no concentration risk. If the system picks 10 stocks and your account is $10,000, each stock gets $1,000.
Monday Rotation Control
The strategy does not use stop-losses. Instead, risk is managed through a Monday-only re-ranking process. Positions are rotated only at the following Monday's open based on the latest ranking. This keeps capital continuously allocated to the strongest opportunities without mid-week interference.
Risk Example
You have $10,000 in your trading account. The system selects 10 stocks this week.
$1,000
Per position
$50
Max loss per stock (5%)
$500
Worst-case weekly loss
Even if every single stop-loss triggers in the same week, the maximum drawdown is 5% of your account. In practice, this worst-case scenario rarely occurs because positions are diversified across different sectors and momentum profiles.
Weekly Risk Budget
The Rule
Do not risk more than ~3-5% of your total account per week.
With equal allocation and a 5% stop on each position, the math naturally keeps weekly risk within this range. No manual calculation needed — the system enforces it structurally.
Stop-Loss Policy
- Always use a hard 5% stop-loss per stock
- Stops are set at entry — never moved wider
- If stopped out, the position is closed immediately
- No averaging down into losing positions
- The stop-loss is non-negotiable — it protects your capital
See how these rules work in practice on the Weekly Rockstar Stocks page, or review our Historic Performance to see how risk management has protected capital over time.
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