Leverage Matrix
“If You Can’t Control Your Leverage,
You Have No Business Being A Trader.
Period. End Of Story. Either Obey Or Lose Everything!”

Leverage Matrix: Google Sheet

The SECOND TAB has a SIMPLIFIED Leverage Matrix Spreadsheet

Since this video I have refined my number of entries to reflect the current environment…. thus my leveage matrix is smaller.

Note From George:

Let me be frank, you NEED a high probability system. And once you have a high probability system, taking PERFECT LOSSES is part of the game. It is NO big deal. We KNOW we have a high probability trade RIGHT AROUND THE CORNER – the data proves it. And… once you KNOW you have a high probability system, you are NO LONGER married to any single trade. If the trade is not behaving correctly, you get out. No biggie. No problem. This trade did NOT perform as expected… SO let it go – fire it! “There is another high probability trade right around the corner.

MAIN QUESTION: How MUCH can you lose on ONE trade and NOT “go crazy“, emotionally speaking? This number might sting A LITTLE but… this amount is “No Big Deal, I Got This. Losses Happen. Oh Well. There is another high probability trade right around the corner“.

What is that amount?? That number is IMPORTANT. It is KEY to your survival as a trader – trust me on this – IT IS!

You have GOT to manage your EMOTIONAL DRAWDOWN BEFORE worrying about “profit”! Emotions first, then profit.

Firstly… There is usually an amount that…. if you let your loss go THAT far… it paralyzes you and you just say “Forget it, let it run. I don’t care.”. NEVER EVER let a loss get even close to this “Blow Your Account Number”. This number will paralyze your thinking. Or worse… traders will often DOUBLE DOWN by adding more contracts. (“Losing trades do NOT need more leverage.”- memorize that small nugget and repeat it often.)

Secondly… Then there is a SMALLER AMOUNT (probably 1/3 of the BLOW YOUR ACCOUNT NUMBER) that stinks if you lose that amount BUT you know you can make it back by tightening up your thinking and sticking to your trade plan. What is THAT price? This SHOULD be your MAX LOSS NUMBER on any single trade.

Let’s say your MAX LOSS NUMBER is $150. You can lose $150 and NOT affect you “too much”, emotionally speaking. Then maybe your Leverage Matrix looks like this.

NUGGET: You SHOULD only risk the full $150 on your TOP TRADE. The rest of the trades SHOULD have LOWER Leverage. Everyone’s number is different. When I first started, it was $30. Then $60. Then $150. It is a growth thing.

What is your number???

This is where you start. Start with this number. Why? This is the FIRST THING you have to manage… your emotional equity!

If you want to be a trader LONG TERM, you had BETTER learn to trade within YOUR LEVERAGE MATRIX!

ES -vs- MES
Leverage Matrix: Part II
Trade Small To Win Big!