6 Paul Tudor Jones Strategies for Managing Risk in Trading

Part-time traders are facing a crisis of blown accounts.
It’s leading to financial stress, lost opportunities, and shattered dreams.


Stop-Loss Discipline

– Implement strict stop-loss orders to limit potential losses.
– Regularly adjust stop-losses based on market conditions and volatility.
– Treat stop-loss orders as a critical component of every trade.

Predefined Risk-Reward Ratios

– Set and follow predefined risk-reward ratios for all trades.
– Only enter trades where the potential reward justifies the risk taken.
– Continuously evaluate the outcome of trades to refine risk-reward thresholds.

Risk Per Trade

– Define the maximum percentage of capital to risk on a single trade.
– Consistently apply this rule across all trades to manage exposure.
– Adjust risk levels based on the trading performance and market outlook.

Leverage Management

– Use leverage cautiously to enhance returns without amplifying risks unduly.
– Monitor leverage ratios closely, particularly during periods of increased market stress.
– Reduce leverage during high volatility or when trading performance is not optimal.


– Diversify investments across different asset classes and strategies.
– Avoid correlation risks by selecting varied investment vehicles.
– Regularly reassess and rebalance the portfolio to optimize risk distribution.

Regular Portfolio Review

– Conduct regular reviews of the entire trading portfolio.
– Assess overall risk by considering current market conditions and potential stress scenarios.
– Make strategic adjustments to align with risk management objectives.

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