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Lesson 7 – Risk Management Principles

Lesson 7 – Risk Management Principles

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Education Center / Day Trading / Futures Course / Lesson 7 – Risk Management Principles

Lesson 7 – Risk Management Principles

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Lesson Videos

Lesson 7 - Risk Management Principles

level Level: Beginner

level Experienced Instructor

About This Lesson

This lesson teaches the core principles of risk management and how protecting capital is essential for long term trading success. Students will learn how to calculate proper position size, define acceptable risk per trade, manage drawdowns, and maintain consistency through structured risk parameters. By the end of the lesson, traders will understand how disciplined risk management helps reduce emotional decision making and creates the foundation for sustainable performance.

Downloads

  • There are no downloads for this lesson.

Presented by

Michael Baehr

Michael, a retired Sergeant Major with 23 years of service, discovered Andrew’s book in 2018 and joined Bear Bull Traders to pursue his goal of becoming a full-time trader. He spent his retirement years focusing on trading education, developing a business plan, and enjoying time with his family and volunteering.

Michael Baehr's Recent Webinars

Mike Baehr Futures Strategy 30 min ORB-Mike

Lesson 10 – Full Futures Trading Game Plan

Lesson 10 – Full Futures Trading Game Plan

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Lesson 9 – Psychology Management Principles

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Andrew Aziz (C) Bear Bull Traders is a business based in the United Arab Emirates. For all inquiries please contact (email only) Aziz Online LLC FZ Al Shohada Road Al Hamra Industrial Zone - FZ - Ras al Khaimah - United Arab Emirates [email protected]

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Available research data suggests that most day traders are NOT profitable.

The Profitability of Day Trading: What Research Tells Us A growing body of academic research suggests that the majority of individuals who engage in day trading do not achieve consistent profitability.

In a comprehensive 2014 study titled “Do Day Traders Rationally Learn About Their Ability?”, researchers from the University of California analyzed an extensive dataset comprising 3.7 billion trades executed on the Taiwan Stock Exchange between 1992 and 2006. Their findings revealed that only 9.81% of day trading volume could be attributed to traders who demonstrated repeatable, predictable profitability. Furthermore, these consistently profitable traders represented less than 3% of all active participants on any given trading day.

A separate study published in the Journal of Applied Finance in 2005, titled “The Profitability of Active Stock Traders”, examined 1,146 U.S.-based brokerage accounts that actively traded equities between March and June 2000. The researchers, affiliated with the University of Oxford and University College Dublin, found that only 50% of traders generated a profit during that period, with the average net gain being $16,619.

Similarly, a 2003 study published in the Financial Analysts Journal, “The Profitability of Day Traders”, reviewed 334 active trading accounts from February 1998 to October 1999. In that sample, only 35% of accounts were profitable, and a mere 14% earned profits exceeding $10,000.

These studies collectively demonstrate the substantial difficulty of achieving long-term success in day trading. While methodologies and market conditions varied, the overall trend remains clear: a significant portion of retail traders fail to generate consistent profits. At minimum, the data implies that at least half of all day traders are unlikely to be profitable, and in many cases, the percentage is considerably lower.

These findings underscore the reality that day trading is a highly speculative and risky activity. Participants should be fully aware that trading can result in significant financial losses, including the total loss of invested capital.

The content provided is intended for informational and educational purposes only. It does not constitute financial, legal, or tax advice. Any mention of a specific security or market should not be interpreted as a recommendation to buy or sell. All investments and trades carry risk, and decisions should be made with care and, where appropriate, with guidance from a licensed financial professional.

For full legal details, please refer to our complete disclaimer here.

Citations:

Barber, Brad; Lee, Yong-Ill; Liu, Yu-Jane; Odean, Terrance. (2014). Do Day Traders Rationally Learn About Their Ability? SSRN Electronic Journal. SSRN Electronic Journal

Garvey, Ryan; Murphy, Anthony. (2005). The Profitability of Active Stock Traders. Journal of Applied Finance, Vol. 15, No. 2. The Profitability of Active Stock Traders

Jordan, Douglas J.; Diltz, J. David. (2003). The Profitability of Day Traders. Financial Analysts Journal, 59(6), 85–94. The Profitability of Day Traders

Lesson 7 – Risk Management Principles

| Published: 06/3/26

Education Center / Day Trading / Futures Course / Lesson 7 – Risk Management Principles

Lesson 7 – Risk Management Principles

Login or Sign up or Upgrade

Lesson Videos

Lesson 7 - Risk Management Principles

level Level: Beginner

level Experienced Instructor

About This Lesson

This lesson teaches the core principles of risk management and how protecting capital is essential for long term trading success. Students will learn how to calculate proper position size, define acceptable risk per trade, manage drawdowns, and maintain consistency through structured risk parameters. By the end of the lesson, traders will understand how disciplined risk management helps reduce emotional decision making and creates the foundation for sustainable performance.

Downloads

  • There are no downloads for this lesson.

Presented by

Michael Baehr

Michael, a retired Sergeant Major with 23 years of service, discovered Andrew’s book in 2018 and joined Bear Bull Traders to pursue his goal of becoming a full-time trader. He spent his retirement years focusing on trading education, developing a business plan, and enjoying time with his family and volunteering.

Michael Baehr's Recent Webinars

Mike Baehr Futures Strategy 30 min ORB-Mike

Lesson 10 – Full Futures Trading Game Plan

Lesson 10 – Full Futures Trading Game Plan

Lesson 9 – Psychology Management Principles

Lesson 9 – Psychology Management Principles

promo
Lesson Content
0% Complete 0/1 Steps
Previous Topic
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