Risk Management

Essential rules regardless of strategy.

Core Principles

1

Never >10% of portfolio in algorithmic synthetics

Limit exposure to algorithmic synthetic assets to under 10% of your total portfolio.

2

Set predetermined exits before entering

Define your exit points (take-profit and stop-loss) before opening a position.

3

Understand total loss is possible

Recognize that certain strategies or instruments can result in a complete loss of capital.

4

Monitor daily during first weeks

Track new positions closely—daily monitoring is recommended during the initial weeks.

5

Diversify strategies

Avoid allocating everything to a single strategy; diversify across approaches and instruments.

6

Compound strategically vs taking profits

Plan whether to compound gains or take profits based on your overall strategy and risk tolerance.

7

Account for taxes

Frequent claims or trades can be taxable events—plan for tax implications.

8

Use stop-losses mentally and on-chain

Implement stop-losses both as mental rules and, where possible, enforced on-chain mechanisms.

Position Sizing

• Conservative: 2–5%

• Balanced: 5–8%

• Aggressive: 8–10%

• Never: >10%

Position sizing should align with your risk tolerance, strategy, and the overall portfolio allocation.

Exit Discipline

Set exits before entering. Don't rationalize staying when triggers hit.

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