📘 Chapter 4 Workbook

Risk & Trade Execution

Stop-Loss, Take-Profit, Leverage, and Position Sizing

⏱️ 90-120 minutes
📋 5 Exercises
🧮 Interactive Calculators
⚠️
Educational Disclaimer: This workbook is for educational purposes only and does not constitute financial advice. Trading forex and cryptocurrency involves substantial risk of loss. 70-80% of retail traders lose money. Never trade with money you cannot afford to lose.
Exercise W4-1

Forex Lot Size Calculation Drill

Practice calculating forex position sizes using the three-step formula until it becomes automatic.

🧮 The Formula (Write this on a sticky note!)
Step 1: Account Risk $ = Account Size × Risk %
Step 2: Trade Risk $ = Stop Distance (pips) × Pip Value ($/pip)
Step 3: Position Size (lots) = Account Risk $ ÷ Trade Risk $
Trade 1: EUR/USD Major Pair
Trade 2: GBP/USD Major Pair
Trade 3: USD/JPY JPY Pair ⚠️
⚠️ Important Note
JPY pairs are quoted to 2 decimal places, not 4! Use multiplier of 100 instead of 10,000 for pip calculation.
🔑 Answer Key: W4-1
Trade 1: EUR/USD
• Step 1: $1,000 × 1% = $10
• Step 2: |1.0950 - 1.0920| × 10,000 = 30 pips
• Step 3: 30 pips × $0.10 = $3.00
• Step 4: $10 ÷ $3.00 = 3.33 → 3 micro lots (0.03 standard)
• Verification: 30 × $0.10 × 3 = $9.00 ≈ $10 ✓
Trade 2: GBP/USD
• Step 1: $2,500 × 0.5% = $12.50
• Step 2: |1.2700 - 1.2660| × 10,000 = 40 pips
• Step 3: 40 pips × $0.10 = $4.00
• Step 4: $12.50 ÷ $4.00 = 3.125 → 3 micro lots (0.03 standard)
Trade 3: USD/JPY
• Step 1: $5,000 × 1% = $50
• Step 2: |150.00 - 149.50| × 100 = 50 pips (JPY uses 100!)
• Step 3: 50 pips × $0.09 = $4.50
• Step 4: $50 ÷ $4.50 = 11.11 → 11 micro lots (0.11 standard)
Exercise W4-2

Crypto Position Sizing & Leverage Drill

Calculate crypto position sizes and understand how leverage affects margin (but not risk).

🧮 Crypto Formula (Different from Forex!)
Step 1: Account Risk $ = Account Size × Risk %
Step 2: % Stop = |Entry - SL| ÷ Entry
Step 3: Position Notional $ = Account Risk $ ÷ % Stop
Step 4: Quantity = Position Notional $ ÷ Entry Price
ℹ️ Leverage Note

Margin Required = Position Notional ÷ Leverage
But your RISK is still determined by Step 1, not leverage!

Trade 1: BTC/USDT 5× Leverage
Leverage Comparison Tool BTC/USDT

Same trade with different leverage levels. Watch how margin and liquidation change while risk stays the same.

🔑 Answer Key: W4-2
Trade 1: BTC/USDT
• Step 1: $1,000 × 1% = $10
• Step 2: |$40,000 - $39,600| ÷ $40,000 = 1%
• Step 3: $10 ÷ 0.01 = $1,000
• Step 4: $1,000 ÷ $40,000 = 0.025 BTC
• Margin Required: $1,000 ÷ 5 = $200
Key Lesson
Leverage doesn't change RISK if SL executes properly,
but it brings LIQUIDATION much closer,
which can cause BIGGER losses than planned.
Exercise W4-3

Stop-Loss & Take-Profit Placement Practice

Practice placing SL and TP on actual chart setups using logical reasoning (not emotions).

Chart 1: Bullish Swing Low Bounce EUR/USD 4H
Entry
Stop-Loss
Take-Profit
40
Risk (Pips)
80
Reward (Pips)
1:2.0
Risk-Reward
Setup Description

• Clear uptrend with higher highs and higher lows
• Price pulled back to previous resistance (now support) at 1.0850
• Bullish engulfing candle just formed at support
• Recent swing low visible at 1.0820

What percentage of breakouts fail?
~30%
~50%
~70%
Exercise W4-4

Expectancy Tracker (10 Demo Trades)

Track 10 demo trades to understand your win rate, average win/loss, and expectancy.

📊 Expectancy Formula
Expectancy = (Win% × Avg Win) - (Loss% × Avg Loss)

If expectancy is positive, you'll profit long-term (if you follow your rules).

#SetupEntrySLTPRisk $R:RResult $W/L
Exercise W4-5

PH Platform Safety Checklist

Learn to verify if a trading platform is safe and compliant in the Philippines.

Platform Being Evaluated

Section 1: Philippine Compliance

  • Check: bsp.gov.ph

Section 2: Red Flags (Mark if present)

Section 3: Security Features

Final Reflection

Chapter 4 Mastery Self-Assessment

Before moving to Chapter 5, honestly assess your understanding.

Your Trading Commitment
  • I will ALWAYS calculate position size before entering
  • I will NEVER widen my stop-loss after entry
  • I will use LOW leverage (3-5× max as a beginner)
  • I will risk only 0.5-1% per trade
  • I will trade only on registered, safe platforms
  • I will track every trade in my journal
I commit to following proper risk management
➡️ What's Next? Chapter 5

Trading Psychology & Journaling
• How to manage emotions (fear, greed, FOMO)
• How to avoid revenge trading
• How to keep a trading journal that actually improves your results