American Pie

_{Your Trade Management Guide}

Trading is a deeply personal endeavor. What works for one person may not work for another due to unique goals, objectives, benchmarks, and, most importantly, risk tolerances. Some traders may be very risk-averse, while others may be more risk-tolerant, with a vast spectrum in between. Professional traders adopt a structured and disciplined approach to trading, adhering to specific guidelines to maximize success over the long term. If you don't have your own management structure in place, we have created one specifically for our Members:

_{Risk Management}

• Limit Risk to 1-2% of Your Total Wallet Value: Ensure that you risk only 1-2% of your total wallet value (in dollars) per trade or position in your futures trading account. For instance, if you have $X dollars in your futures trading account, the maximum amount you should risk in a single trade is 1-2% of that value. If your account holds $10,000, your maximum acceptable loss should be $100-$200. While this might seem conservative to new traders, it's crucial for long-term success. By limiting your losses, you set yourself up for success even if you win only 50% of your trades. This principle, popularized by the late Mark Douglas, provides traders with a built in statistical advantage.
• The Importance of Limiting Losses: Once again-exceeding the 2% threshold can quickly lead to significant losses and jeopardize your trading account. It's essential to stick to this rule.
• Implementing Risk Management with Signals: Now that we understand the importance of the 1-2% rule, when entering a trade, make sure that the dollar value of your stop loss equals 1-2% of your total wallet value. Rather than adjusting the stop loss price to meet this percentage, adjust the total dollar size of your position. Step 1-enter the entry, profit and stop loss price from the signal. Step-2, enter the leverage. Step 3-adjust the value size of your trade so that the stop loss amount is = to the 1-2%. This approach helps maintain consistency in risk management while maximizing potential returns.
• Avoid Over-Leveraging: In futures trading, over-leveraging is a common pitfall and a major reason for financial losses. Leverage amplifies both gains and losses, making it crucial to exercise caution. Over-leveraging can lead to position liquidation, wallet liquidation, and even account bankruptcy. Generally, the higher the leverage, the greater the risks involved. Realistically, leverage exceeding 4X can pose significant problems, with even higher leverage magnifying these issues. If possible, aim to use minimal leverage to achieve your desired position size. If you decide to use leverage between 2X and 5X, or even higher, be aware of the extremely high risk potentials and how leverage can impact your trading outcomes. Remember, in volatile market conditions, the use of leverage becomes even riskier.
• Your leverage setting affects the structure and performance of your trades: If you use a higher leverage ratio than the leverage recommended on our signals, there is a strong chance that in certain instances your position may liquidate and be closed by your exchange automatically prior to stop loss. If you do decide to use higher leverage than the published number, you will need to adjust the structure of your position prior to opening the position to avoid the potential for the premature closing of your position in adverse conditions. Trading using “cross” may or may not prevent this from happening, but this is dependent on many factors. Our signals are structured so that liquidation will generally not occur before stop loss if you follow the leverage noted and other parameters. But also be advised that the value size of your position may or may not change the liquidation structures of our signals. Unusually large dollar value positions will need to be pre calculated according to the specifics of your exchange to identify liquidation thresholds.  Exchanges have a fee schedule or trade calculator available for these purposes. Please research all of this in detail prior to entering into any position.
  
• Managing Active Positions: For perspective, a small commercial trading desk will typically have about 50 positions open at one time. At American Pie, we run our trading strategy similar to a commercial trading desk. We will typically have 10-30 positions open at the same time. This is being done primarily to offer full market coverage to our members. Our members typically cherry pick trades that match their personal strategy. The number of active positions is a personal choice. Having 2-5 active positions at any given time is very reasonable and about an average for retail traders. Overtrading and overmarket exposure can become detrimental to your overall performance. Find your own pace. Although the total results on all of our compiled trades have extremely high performance results and we know that some of our members run every one of our trades- we recommend you do not take positions on every published signal. This will be considered over-trading and can put you at overexposure to the market.
• Understanding Trading Modes: Learn and comprehend the differences between trading with "cross" or "isolated" settings before trading. Each mode has its advantages and drawbacks. Until you fully grasp these settings, it's advisable to use "isolated" mode. Note that all of our trades are structured to use isolated margin mode only.
  Risk Reward Ratios: Our strategy has risk reward calculations baked in to all of our signals. These factors have all been pre calculated for our members. Our signals are structured so that we will always win more than we will lose. This circles back to the 50/50 win rate rule. Our normal ratios are in the range of 1.25. In the rare case when we call a signal with a 1:1 or less ratio, this will be mentioned in the notes of our signal.
• Understanding Liquidation: Understand how "LIQUIDATION" will impact your positions. Take the time to comprehend not only what liquidation entails but also how it can adversely affect your trades.
  Black Swan Events: Unforeseen events happen constantly in futures trading causing unexpected volatility. There is no way to predict when they will occur. Having a conservative approach to your money at risk at any given time, is the best way to protect the value of your overall trading program.

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Risk Management Reminder: Trade at your own risk. Only risk what you can afford to lose. Losing trades are inevitable, so plan accordingly. Consider the implications if the trades you're in all stop out in full losses. Past results have no bearing on future performance-ever.

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