P1: PIC/b P2: c/d QC: e/f T1: g
c13 JWBK182-McDowell April 25, 2008 16:20 Printer: Yet to come
134 A TRADER’S MONEY MANAGEMENT SYSTEMguideline as to how much risk you are in a position to take on. It assesses
what you feel your risk tolerance is, what risks you are currently exposed
to, and what your skill level is. Answering these questions will give you
your score:1.What do you feel is the risk level of the market you trade or invest in?
(Your answer is based on your opinion.)
a. Low risk market, bonds, not using leverage, etc. (5 points)
b.Medium risk market, stocks, etc. (10 points)
c.High risk market, futures, using leverage, etc. (15 points)
2.What was the total percent of return on your active trading account
over the last 12 months? (If you do not have 12 months of data, take
your average percent per month and multiply it by 12)
a. Up 50 percent or more over last 12 months (5 points)
b.Up 10 to 50 percent over last 12 months (10 points)
c.Lost money, or was up under 10 percent over last 12 months
(15 points)
3.What is your average win ratio?
a. 50 to 100 percent winning trades (5 points)
b.35 to 50 percent winning trades (10 points)
c.0 to 35 percent winning trades (15 points)
4.What do you feel is your personal risk tolerance?
(Your answer is based on your opinion.)
a. Prefer low-risk ventures (5 points)
b.OK with medium-risk ventures (10 points)
c.Enjoy high-risk ventures (15 points)
5.What is your trading experience level?
a. Consistently profitable over 12-month period (5 points)
b.Breaking even over 12-month period (10 points)
c.No experience or losing consistently (15 points)
6.What is your average payoff ratio?
a. Better than 3 to 1 (5 points)
b.Between 2 to 1 and 3 to 1 (10 points)
c.Worse than 2 to 1 (15 points)Write Your Risk Score Here:
Once you have checked off one box for each of the six risk profile ques-
tions, then add up the number of total points and enter the score above.
(You will see the points for each answer in parentheses next to your selec-
tion for each question.)