G’day legends,
As you read this, I’m likely somewhere deep in the Victorian high country with my kids, having an absolute ripper of an adventure. No charts. No screens. Just mountain air, laughter, and memories in the making. And really—that’s what it’s all about.
But I didn’t want to leave you hanging. Instead of our usual live market analysis, I’ve prepared something even more valuable: an educational piece on risk management—the beating heart of all successful trading. Whether you’re brand new or one of the battle-hardened, this is the stuff that keeps you in the game.
Trading ≠ Gambling
Let’s get something straight: trading isn’t gambling. A gambler hopes. A trader plans. Gamblers chase wins. Traders protect capital. If your focus is profit first, you’re setting yourself up for heartbreak. Profits aren’t in your control. Risk is. And that’s where your focus needs to be.
The shift from chasing profits to following structure and discipline is what separates pros from punters.
Capital Preservation Comes First
Smart traders ask:
“How much am I risking?”
“What’s my exit if I’m wrong?”
“What is my process?”
These aren’t glamorous questions, but they are essential. Without capital, you don’t get to trade again. Every trade should begin with one mindset: preserve capital first, then transfer that controlled risk into potential reward.
Structure Over Emotion
We don’t guess. We follow a system. My go-to is 1% risk per trade. Why?
Let’s say your account is $5,000—1% risk means a $50 trade loss. It’s not going to ruin you, but it is enough that you’ll pay attention and follow your process.
Tracking your trades, taking screenshots, and doing post-trade analysis will let you fine-tune your strategy over time. You’ll learn your best setups. Not mine. Not anyone else’s. Yours.
The Power of the “Parachute Plan”
Trading gets tough. Losses come in streaks. That’s why you need a parachute plan—a risk threshold that forces you to pause and reflect.
Here’s mine:
Daily loss limit: 2% → I stop for the day
Weekly loss limit: 3% → I stop for the week
Monthly loss limit: 5% → I stop until next month
No “just one more trade.” No revenge trading. We’re running a business, not a casino.
Scaling Out & Risk-Free Trades
New traders often obsess about hitting 3:1 or 4:1 reward ratios. But early on, your goal should be simple: get to breakeven consistently.
That’s why I teach a 1:1 first target.
Here’s the play:
Risk $200
Take partial profits at 1:1 ($200 gain)
Move stop loss to entry
Let the rest run
If the price comes back? You’re breakeven. If it keeps going? You're banking more—without risking additional capital.
Final Thoughts
You don’t need to be great to start, but you do need to start to become great. Track everything. Reflect often. Set rules and follow them. Be disciplined, protect what you have, and the profits will follow.
Don’t forget—trading isn’t about how much you can make. It’s about how well you manage what you have.
Until next time, stay safe, stay sharp.
— Craig
Trader Cobb | The Grow Me Co
Summary:
Craig Cobb's latest newsletter is a masterclass in risk management for traders. With no live market review this week, Craig emphasizes that trading success comes down to capital preservation, strict risk controls, and a disciplined approach—not chasing profits. He outlines a clear plan for managing losses and discusses why starting with a 1:1 reward-to-risk strategy is ideal for new traders.
Key Lessons:
Trading is not gambling: Focus on structure, not hopes for big wins.
Capital preservation is the first priority: Without money, you can’t trade.
Risk 1% per trade: Low enough to protect your capital, high enough to care.
Track everything: Use screenshots and data to improve strategy over time.
Have a parachute plan: Walk away when daily, weekly, or monthly loss limits are hit.
1:1 profit targets are key for beginners: Take partial profit, move stop to break-even, and reduce stress.
Break-even trades are a win: They’re the bridge between losses and long-term profitability.
Let big trades run (after managing downside): Capture large moves without risking full exposure.
Accountability matters: Review your trades and own your mistakes.
Consistency beats intensity: The disciplined trader wins over time.
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