Build the worksheet from current equity
Start with a fictional trading account of PHP 50,000 and a study assumption of 1% planned risk per idea. The first risk amount is PHP 500.
Your worksheet should not stop there. Add columns for starting equity, risk percentage, planned peso loss, realised loss, and ending equity. After each hypothetical loss, calculate the next risk amount from the new account value.
For example:
| Trade | Starting equity | 1% planned risk | Fictional realised loss | Ending equity |
|---|---|---|---|---|
| 1 | PHP 50,000 | PHP 500 | PHP 500 | PHP 49,500 |
| 2 | PHP 49,500 | PHP 495 | PHP 495 | PHP 49,005 |
| 3 | PHP 49,005 | PHP 490.05 | PHP 520 | PHP 48,484.95 |
Trade 3 is deliberately different. The realised loss is larger than the planned risk because execution is assumed to be worse than expected. The next risk calculation should use PHP 48,484.95, not the amount the trader wishes the account still had.
Add a correlated-exposure column
Now imagine the trader has three open ideas, each with PHP 500 of planned loss. Give each trade a simple factor label such as BTC-market direction, altcoin beta, same stablecoin, or same exchange.
If all three positions depend on the same broad market direction, write the combined planned loss beside them. Three PHP 500 risks can create PHP 1,500 of exposure to one shock. If two positions also depend on the same exchange being operational, record that shared operational dependency separately.
This step prevents the worksheet from pretending that “three trades” automatically means “three independent risks.”
Stress the percentage before accepting it
Run three tests:
Normal sequence: ten losses occur one after another and each is close to the planned amount.
Execution stress: two losses are 30% worse than planned because of spread, slippage or a gap.
Correlation stress: three positions reach their loss conditions during the same broad market move.
For each test, record the final equity and the largest one-day loss. Then ask whether the risk setting still leaves enough room for the trader to follow the process without trying to recover immediately.
Define a rule for changing the risk budget
The worksheet needs a decision boundary. Examples might include reducing risk after a defined drawdown, after evidence shows that actual losses repeatedly exceed planned losses, or when correlation among open positions rises materially.
The exact threshold is not universal. What matters is that the trigger is observable and written before stress. “I will reduce risk if I feel nervous” is not measurable. “I will recalculate if realised losses exceed planned losses by more than my stated execution buffer in three of the last ten trades” is at least testable.
Completion check
Finish the worksheet with one sentence answering each question:
- What account value is the percentage applied to?
- What is the planned peso loss on the next idea?
- How much can be lost if correlated positions fail together?
- How much larger could a stressed realised loss be?
- What specific condition causes risk to be reduced or trading to pause?
If the worksheet cannot answer those questions, the percentage is not yet a usable control.
*Cryptocurrency and virtual asset transactions are highly volatile and irreversible, may result in significant losses, and do not guarantee returns; customers should trade only after understanding the risks involved.
