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probably say that if you were trading lower than 50 to1

going to be quite large for your account size so yeah

pull out to your safe portion in another account I would

trade 100-1 leverage then you only ever engage a very small

leverage ratio determines your partition ratio because if you

investment property or a car with it for example because if

you have enough margin to keep trading so remember even though

true account value now the second rule is that your

extremely liquid so the portion of capital that you remove from

being that you need to keep your safe portion of capital

obviously has the same effect as trading 1% risk on your

little bit of research on that and you may want to get some

something called a mortgage offset account so just do a

access your funds then at least your capital is more secure

can increase your overall return by potentially another

broker as you're risking 2% per trade on your brokerage account

just spoken about a 6040 or even an 8020, but there are two

just one so essentially your risk is half also you can earn

do which we're going to take a look at now so to reduce the

you know financial advice so since you'll be trading 2% risk

right because only half of your capital is actually stored in

funds in just that one account. So if your account size is 100,

this but you know that there could be a there could be a

there. So whenever you are calculating your position size

some sort a savings account and then just double your trade

calculation so that you are risking a percentage of your

yielding investment account now I appreciate in the current

start to run into some trouble when you're risking 2% across

buy orders on the other side of the market to fill their sell

encourage more secure asset diversification and you also

balance in your brokerage account when you make that

segregated account you need to add this to your account

capital the the safe portion that you have put in a

a time and especially if you're the type of trader who uses

so you can move fifty into another investment account of

but with no disadvantage to your trading activity at all so

partitioning because it's pretty likely you will not have

point of this isn't to scare you these events are extremely

two main benefits the first is that in the extremely unlikely

stand to increase your overall percentage returns even if it's

you are still risking 1% of your total account size right

even getting filled and just a massive floating loss which

on the 50, 000 that remains in your trading account this

you have a mortgage you can also look into opening

partitioning is not necessarily going to work too well for you.

you can petition a capital with say a 50/ 50 spit like we've

perspective although it's only a 10% drawdown based on your

leverage it's probably not advisable to be using capital

the charts let alone whilst you're actually in a trade it's

their stop loss just below that level and then when this goes

interest at the moment but you know that's the idea behind it

so segregating your account into different partitions it

yeah the brokers were just not prepared for yeah I mean the

rules that you really need to keep in mind the first one

leverage and by segregating your account you essentially

account right which is going to be 1, 000, but because you only

trading a 100, 000 account so if you edit a 20, 000 pound

just a little bit at the moment with the interest that a lot of

means that you should not go out and you know buy an

you hit a long run of draw downs then you meet you you may

drawdown this will appear as 40% draw down from the broker's

your trading account you need to keep it liquid and this

of their trading capital tied up in their brokerage account

enough available margin to open more than a couple positions at

need to tip more money into your FX account to ensure that

event that something happens to your broker and you cannot

your leverage the lower you'll be able to pull out you know

risk you just need to remember to always add the amount of

called capital partitioning so capital partitioning it's a

size for each position that you then take in the market because

nought. 5- 3% per year right it's better than nothing now if

if you only trade say 20 to1 leverage however then you can

unless you have very high leverage then capital

amount of capital and risking 2% position is no problem but

have 50, 000 pounds in your account this will appear to the

quite small stop losses that means that your lot size is

management routine that I would recommend for any student

a guaranteed return from the other half that sits in a you

multiple positions simultaneously and the lower

everyone who got long right where do you think they put

so you're still risking 1% based on $100, 000 in your

acts as a hedge against the risk of having all of your

since it is held in two separate accounts instead of

to protect yourself from but there are some things you can

your exposure to any broker risk we could use a technique

brokers went under they went completely bankrupt because a

movement that is you know on this pair in a single day and

initial hundred grand account so therefore you will receive

000 what you can do is move 50, 000 into a high interest

negative balance and they owe money to the broker that they

know quote unquote high interest earners account this

longer holding that peg you know to the euro and if we

the amount of slippage that occurred literally loads of

risk from Blackspan events like the Swiss frankly pegging and

true account value right so capital partitioning really has

around that time you know compared to other times of the

order right to fill their stop loss so then people were

economic climate there isn't really such thing as high

opt for when their account grows beyond a certain

wiped out literally in the space of a few seconds with

terrorist attack you never know and there can be insane periods

So yeah just to summarize capital partitioning is a risk

right there's not enough liquidity there's not enough

trading a large account as long as you have pretty high

broker and reduce the opportunity cost of having all

of volatility in the market you know which which it can be hard

may as well trade in the side of the bank right so everyone

happened right something might not happen as drastically as

know in your lifetime or even just whilst you happen to be in

your account balance may save 50 grand you are essentially

banks are just about managing to offer. So yeah that wraps it

threshold size and they wish to both reduce their exposure to

the benefits and security of diversifying your part capital

would obviously see this currency pair go up right

slightly more advanced risk management routine that traders

actually just measure this day roughly in one single day that

were never going to be able to pay back because you know

lot of their clients right accounts that went into

getting filled you know all the way down here or you know not

pretty much next to zero but you need to be aware that you

quite a few brokers and probably thousands of traders

came back down around in the 2014 2015 a lot of traders saw

then

extremely rare I mean the chances of this happening you

well start of the year not a lot of liquidity in the markets

this is a pretty easy trade central bank's going to step in

there's literally no words that can describe how insane of a

know anything can happen and these these events have

obviously if if if the Swiss Frank itself is bearish and

this move that came in so they suddenly completely unannounced

was getting long down here now I'm sure you can probably start

currency to the euro at the rate of 120 so they essentially

heavily essentially forcing the currency pair came up so as we

year and we just paid this forward a couple of days and

euros with it essentially to weaken the Swiss frank so that

just got released to the market that the central bank were no

just have a quick little look at what went down so

simple the Swiss bank was essentially pegging their

had this pretty much artificial floor within here that whenever

but this was kind of around the time that I was really starting

move peaked at just over 2, 300 pips in a single day Uh that

to guess what happens next but yeah around kind of January as

then you know a lot of traders knew this and then that every

time price came down the central bank would step in

heavy selling with the Swiss Frank and they were buying

to get into trading when this happened and yeah well let's

world that happened was with the Swiss the pegging in 2015

price came down they essentially did some really

essentially to keep a sort of long story quite short and

so some of you may not be aware of this or may remember this

unplanned events that can hit the market right now one of

periods of time in the market when we know you know around

announcements and then also avoid trading around those

probably the most famous things if you've been in the trading

prepare for this is to look at those planned news

right when liquidity is to be low but as we know there can be

calculated to potentially lose now we know that one way we can

the agent session and the daily rollover around spread out

anticipated right more than the risk that you had originally

when there you know can be volatile events in the market

up. See you guys in the next lesson.

can experience you know losing more than you had initially

and you know we've we've realized how that can happen

and when you combine that with sort of low liquidity yeah you

In the previous lesson we've now kind of looked at slippage