How to Manage Risk Properly with the Inversion Setup transcript

yo what is going on guys I'm not a financial adviser this is not Financial advice if you want to watch my live streams every single day um I do basically what I'm teaching now but just in live time and I'll show you how to do it all in uh live time so click the Link in the description I will probably be raising the prices in uh December um so make sure to get on that um lastly if you want to start an apex account Apex is running a 90% off sale right now I think there's 11 days left or 12 days left um use the code description the rbe whatever it is um click the Apex link um really good for practicing Futures and practicing what I'm teaching specifically um so yeah all right so for this video I'm going to be showing you guys how to actually manage risk properly for an inversion setup and I'm going to actually use a a loss example of a loss I took earlier this morning um and kind of show you guys what to do so I kind of the proper way to do this is do this okay so let's say we're on account okay and let's say I only want to risk $200 on this account okay let's say this is a live account um and I'm on mnq okay now let's say I only want to risk 200 he well what does that mean that means I can take up to however many contracts will not will uh however many contracts that will not go below $200 if I stop out so for example if we have a price level here and this is$ 14,000 and let's say we want to Long here okay let's say you want to long in this level and the stop loss would be let's say 13,000 um let's say 980 okay let's say there's like an order block here or let's say there's like a a swing low here or or whatever it may be okay now let's say that swing lows there and that's where you want to put your stop okay to me that would be a 20 point stop loss so I'd be willing to risk however many points I could get to not allow me to go to 200 so if we took one micro here okay you can see it's a 20 point stop times 20 points time $2 per micro so it's $40 per micro you're going to lose here so if I took one micro 14k and lost and it hit the stop loss here I'd be minus $40 and then I just do however many times I could lose $40 until it equals 200 which is obviously five because 200 divided by 40 is five so we could take up to five contracts here and if I lost five con if I took five contracts here and it was losing trade I lose 200 okay now taking that logic what I do for an inversion like this okay is this right if I see this inversion this two-minute inversion what I do is I typically Market bu so I'm going to be go over both ways I typically to short here I short the close so I'm shorting here all right and you can use this short position I'll show you how to do this in a second and I like to guess where okay if I already get stopped the close could be about here which would be best case scenario here worst case scenario or or here worst case scenario so I me sorry I meant to say middle case scenario so worst case scenario close is probably going to be around here best case close around here middle case around here so I'm going to count for that middle case right here and I'll risk however many contracts I want for like this middle area part okay so if I entered here and I wanted let's say this low down here okay this low right here I'd basically just guesstimating where I think the close is going to be and you don't know exactly where the close is going to be but because I'm estimating I kind of go in the middle of where I think it's going to be and if I entered here okay um you can see that's 14309 this is 14 342 okay so that's about a um 32 point stoploss so if I only wanted to risk you 100 a 32 point Stop Plus times $2 per contract it's $64 per contract okay means we could take about probably three cuz 60 120 180 and then 192 if you had 12 to that so we could probably take about three contracts here all right and before this candle actually forms okay before this candle forms do you know where we're going to close below no you don't so you're going to do the same thing you're going to say best case scenario we close here middle case we close here worst case we close here okay you don't know we're going to close what I'll do sometimes is I'll let put like a sell limit okay I'll let just put a sell limit here and I'll do like three contracts okay and then I'll do like another sell limit like right here with five okay now these are not sell limits I'm waiting for price to retrace to these are sell limits where if we go here if we close here and it's close like this that's going to make the r risk reward something like this okay okay so immediately if that that's better so I'll drag this red line and quickly it'll just fill me I'll just drag it down here it'll just fill me it'll Market buy me in or Market cover me or sell me in okay so I'm filled there now if we get a close like here okay I'll I'll have this three ready and you can see I have both ready and I'll just be like okay the close is kind of low I'm only going to go three contracts in here because the RIS of War WS worse so I'm going to have to size down to where okay if the stop loss is 32 points I'm only going to be able to take three Contra contracts versus if the stop loss is right here which would only be about 20 points maybe I could take five so you kind of guess on where the close is going to be and then wherever it is you kind of have two limits ready and if we get a close down here now that's horrible that's um a 42 Point stop loss meaning you'd only probably be able to take two contracts here so I just delete one and then I just drag it down and only get in two there instead of three so do you see how like you don't know we're going to run to close but you kind of have a couple case scenarios and you have the contract amount ready for whichever one you think and something you can do is if you rightclick this um you can actually you can actually do risk and you can do a percent of your count or whatever um or you could do dollar amount so what I'll do is I'll do risk 200 only I'll click okay and if we get here you can see if we uh go to add look it if I click the plus button which you cannot see right now let me see if you can take it off replay mode um so if I if I want to show here what you can do is this right right click do uh however much you want to risk go to settings and then go I want to risk 200 only so now we can right click this click create limit order and it already has six contracts here which is risky King 177 now if I move this down and then right click and create limit it changes it to three see how that works so you can already have it automated to wherever the close is and then as soon as you get that close move it to wherever the close is and then do the create limit order and that's how you do it but what I showed you guys a couple minutes ago right here you have to kind of yes okay what's going to be the worst and what's going to be the best case scenario for um for a close like this okay so that's kind of how I do it I'll show you one more example but um one more example so I'll do an example of let's see all right let's do an example of this right here okay so we have it one minute inverse potential inverse right here okay and let's say I want along if we're going to break this okay it close above it I don't know where we're going to close above but I'm going to put a um just in there and I'll kind of wherever we close I'll put it he but for the stop loss if we do close above it you want to think okay what's going to be the worst case close worst case close probably going to be down here best placee around here you're kind of just guesstimating and then best case there so here's the middle case so I would account for the the stop loss to be here so depending on the close okay you don't need to know the close now because depending on the close you you're already going to have this set up where you can right click click settings and you're going to have it automatically raise 200 no matter where the close is so now you type in that 200 you click okay wherever the close is you move it to here and then you just click create limit order whatever um which you cannot do right now because we're in replay mode and it will probably do two contracts here or if you move down here it'll probably put put you in like four contracts so that's how I calculate the risk on inversions if you want to be safe put it under order blocks put it under swing lows that's a much bigger stop loss though you can see like this is going to be a much bigger stop loss um it's up to you how to manage risk on this I prefer prefer the close above and below for the loss um but like I said definitely up to you guys um doesn't really matter that much um and yeah let me know if you have any questions about this Um this can be a little complicated risk managing inversions because a lot of people say like how do you know where the stop loss is going to be if you don't know where you're going to close right that's why I draw these three lines to go in the middle I just kind of guess and um and if you don't like guessing then just do do 75% size instead of full size right because at least if you do 75% and we have a worst case scenario close it's going to be the same as if you had a hard stop all right so that's kind of how you calculate risk with this inversion setup um let me know if you guys have any questions about that and other than that peace