Workbook 5: Risk, Psychology & Rules

This workbook turns the five most protective chapters of Alpha Academy into practice. Work with a pencil, not a highlighter — these pages are for doing. Do the exercises in order, write your answers in the blanks, and only then check yourself against the ## Answers section at the very end. Every number here uses the same rules you learned in Risk Management A–Z through Safety: Scams & Protecting Your Money: if your answer disagrees with the key, re-read that module before moving on.

Module Risk Management A–Z — Risk Management A–Z

Exercise 1 — Complete the loss-recovery table. You start with $1,000. Fill in every blank.

If you lose...	You have left (of $1,000)	Gain needed just to break even
10%	$900	__________
20%	$800	__________
25%	__________	+33.3%
50%	$500	__________
75%	$250	+300%
90%	__________	__________

Exercise 2 — Position sizing, standard stop. Your account is $10,000 and you follow the 1% rule. You want to buy a stock at $80 with your stop at $76.

(a) Your dollar risk on this trade: $__________
(b) Your risk per share: $__________
(c) Shares to buy (shares = $ risk ÷ (entry price − stop price)): __________
(d) What the position costs (this is NOT your risk): $__________

Exercise 3 — Position sizing, learning size. Your account is $4,000 and, while learning, you risk 0.5% per trade. Entry is $25, stop is $24.50.

(a) Your dollar risk: $__________
(b) Your risk per share: $__________
(c) Shares to buy: __________

Exercise 4 — Position sizing, rounding down. Your account is $25,000 and you risk 1% per trade. Entry is $120, stop is $114.

(a) Your dollar risk: $__________
(b) $250 ÷ $6 per share = __________ shares exactly — so you buy __________ shares (always round down).
(c) Your actual dollar risk after rounding down: $__________

Exercise 5 — Spot the mistake. A trader with a $10,000 account says: "My rule is 1% risk. Entry $50, stop $45 — I bought 100 shares because 100 is a nice round number." Name the mistake and give the correct share count.

______________________________________________________________________________

Exercise 6 — Convert results to R-multiples. You planned to risk $80 on each of these trades. Write each result in R.

(a) Made $200 → __________ R
(b) Lost $80 → __________ R
(c) Made $40 → __________ R
(d) Exited early and lost $24 → __________ R

Exercise 7 — Track a week in R. You risked $50 on every trade. Complete the table, then answer below it.

Trade	Result in $	Result in R
1	+$100	__________
2	−$50	__________
3	−$50	__________
4	+$150	__________
5	−$25	__________

(a) Total result in dollars: $__________
(b) Total result in R: __________
(c) You won __________ of 5 trades (a __________ % win rate) — and still finished ahead. In one sentence, why?

______________________________________________________________________________

Exercise 8 — Judge the risk-to-reward. You are looking at a stock at $30, with a stop at $28.

(a) If your target is $33: you risk $__________ per share to possibly make $__________ per share. That is __________-to-1. Does it meet the at-least-2-to-1 guideline from Risk Management A–Z? __________
(b) If your target were $36 instead: the reward is $__________ per share, which is __________-to-1. Does that one meet the guideline? __________

Exercise 9 — Fill in the blanks.

(a) A __________ __________ is an order placed with your broker that automatically sells your position if price falls to a level you choose.
(b) Lose five trades in a row risking 10% of your account each time and you are down about __________ % — and you would then need about a __________ % gain just to get back to even.

Exercise 10 — Daily and weekly limits. Your account is $10,000. Your daily loss limit is 3% and your weekly loss limit is 6%.

(a) Your daily loss limit in dollars: $__________
(b) Risking $100 per trade, how many full losing trades end your day? __________
(c) Your weekly loss limit in dollars: $__________

Module Trading Psychology & Discipline — Trading Psychology & Discipline

For Exercises 11–16, name the trap — fear, greed, FOMO, revenge, boredom, or overconfidence — then write the plan-based move instead.

Exercise 11. Lena's plan: buy if the stock holds above $75, stop at $73.50. The stock holds at $75.20, dips to $74.80 — still above her stop — and her heart pounds. She sells "to be safe," loses $40, and watches the stock rise to her target without her.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 12. Tom's trade reaches his planned target, up $150. A voice says, "What if it doubles?" He holds. By the close the gain is gone and the trade ends at −$30.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 13. A stock Jay has never heard of is up 38% by 11 AM, and his feed is full of other people's profit screenshots. In under two minutes he buys near the top — no plan, no stop, no idea what the company does.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 14. Two minutes after a normal, planned $100 loss, Chris is still angry. He jumps into a bigger trade on a stock he has not researched, with no stop, "to make it back." It loses $260.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 15. It is a slow afternoon and Dan's setup has not appeared for two hours. Feeling like the sitting is wasted time, he puts on a trade "just to have something going," on a ticker he has never watched before.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 16. After five wins in a row, Maya skips her checklist — "I can feel the market today" — and triples her usual size. The next trade loses and wipes out most of the week's gains.

The trap: __________
The plan-based move: __________________________________________________________

Exercise 17 — Loss aversion, fill in the blanks.

(a) For most people, losing $100 feels roughly __________ as painful as gaining $100 feels good.
(b) That one bias pushes traders toward two bad habits: holding __________ too long, and selling __________ too early.

Exercise 18 — Judge the trade, not the outcome. Trade A followed the written plan exactly and lost −1R. Trade B broke every rule — no stop, double size — and won +$300. Which one was the good trade, and why?

______________________________________________________________________________

______________________________________________________________________________ Exercise 19 — Journal entries are data. A journal entry reads, in full: "Bought SPY. Lost $80. Bad day." Name at least four pieces of information from Trading Psychology & Discipline and Trading Plan & Journal that are missing.

______________________________________________________________________________

Module Trading Plan & Journal — Building Your Trading Plan & Journal

Exercise 20 — Size it from the plan. Your account is $3,000 and your plan risks 1% per trade. Your entry is $60 and your stop-loss is $57.

(a) The most one trade may lose: $__________
(b) Risk per share: $__________
(c) Largest position allowed: __________ shares

Exercise 21 — Finish Sam's plan. Here is the start of a real beginner plan. Fill in the three blanks so each piece is specific enough that another person could follow it word for word.

What I trade: SPY only
When I trade: Weekdays, 10:00 AM – 12:00 PM Eastern
My one setup: ______________________________________________________________________________
My daily stop: Sam's account is $2,000 and his rule is to stop for the day after losing 2%. In dollars, that is $__________ — and when he hits it, he is __________ for the day.
One item on my "never" list: ______________________________________________________________________________

Exercise 22 — Spot the mistakes in this plan. "My plan: I will buy strong stocks whenever they look good. I will risk whatever feels right for the trade. My goal is to make $500 every month. If a trade goes against me, I will hold on, because it will probably come back." Name at least three things wrong with it.

______________________________________________________________________________

Exercise 23 — Fill in a journal row. Your planned risk on this trade was $25. You bought a pullback setup in SPY at $510.00 and sold at $512.00 for a +$75 result. Complete the row.

Date	Ticker	Setup	Entry	Exit	Result $	Result R	Feeling	One Lesson
Today	SPY	Pullback	$510.00	$512.00	+$75	_________ _	_________ _	_________ _

Quick check, same $25 planned risk: a −$25 result is __________ R, and a +$25 result is __________ R.

Exercise 24 — Process goal or money goal? Mark each goal P (process) or M (money).

(a) "Journal every trade the same day, all month." __________
(b) "Make $100 a day." __________
(c) "Risk 1% or less on every trade this month." __________
(d) "Double my account by June." __________

Exercise 25 — Fill in the blanks.

(a) Your first __________ trades should be practice trades, made with paper money.
(b) A plan is allowed to change on paper, __________, after studying your journal — and never in the middle of a __________ __________.

Module Accounts, Margin, Rules & Taxes — Accounts, Margin, Rules & Taxes

Exercise 26 — Margin math. You deposit $10,000 into a margin account and buy $20,000 of a stock: $10,000 of your cash plus a $10,000 loan from the broker.

(a) The stock rises 10%. The position is worth $__________. You sell and repay the loan, leaving you about $__________ (before interest and fees) — a gain of about __________ % on your own money.
(b) The stock falls 10%. The position is worth $__________. After repaying the loan you have about $__________ — a loss of about __________ % on your own money.

Exercise 27 — The margin call. Same account as Exercise 26, but the stock falls 40%.

(a) The position is now worth $__________.
(b) Your equity (position value minus the loan) is $__________.
(c) That equity is about __________ % of the position's value — above or below the 25% regulatory maintenance floor? __________
(d) Your own money fell from $10,000 to that equity number — a loss of about __________ %.
(e) If you do not act on the margin call, what can the broker do? ______________________________________________________________________________

Exercise 28 — Regulation T, fill in the blanks.

(a) For US stocks, Reg T initial margin lets your first purchase be up to __________ % borrowed.
(b) With $6,000 of your own money, the most stock you could buy on day one is $__________.

Exercise 29 — Settlement and day-trading rules: true or false? Write T or F, and be ready to explain each one.

(a) US stock and options trades settle T+1 — the next business day. __________
(b) The Pattern Day Trader rules apply to cash accounts. __________
(c) Under the classic PDT rule, a flagged pattern day trader in a margin account had to keep at least $25,000 in equity — but the rule system has been changing, so you must check your own broker's current day-trading rule. __________
(d) Trading profits are not taxed until you withdraw the money from your account. __________

Exercise 30 — The good faith violation. Maya has a cash account. On Monday she sells Stock A for $500. On Monday afternoon she uses that $500 to buy Stock B, then sells Stock B the same day.

(a) Did she commit a good faith violation? __________
(b) On which day does the $500 from selling Stock A settle? __________
(c) What should she have waited for before selling Stock B? ______________________________________________________________________________

Exercise 31 — Wash sale, case 1. You sell 100 shares at a $400 loss on June 10. On June 25 you buy the same stock again because "now it looks good."

(a) Does the wash sale rule apply? __________
(b) What happens to the $400 loss for this year's taxes? ______________________________________________________________________________

Exercise 32 — Wash sale, case 2. You sell a stock at a loss on March 5 and buy it back on April 20. The 30th day after your sale was April 4.

(a) Does the wash sale rule apply? __________
(b) The full window the rule watches is __________ days total: __________ days before the sale, the sale day itself, and __________ days after.

Exercise 33 — Short-term or long-term? Mark each gain ST (held one year or less) or LT (held more than one year).

(a) Bought January 10, 2025; sold November 3, 2025. __________
(b) Bought March 2023; sold May 2025. __________
(c) Bought at 10:00 AM and sold at 2:00 PM the same day. __________

Module Safety: Scams & Protecting Your Money — Safety: Scams & Protecting Your Money

Exercise 34 — Name the scheme. A group chat is hyping "ZQPT, a tiny stock under $1, about to explode on a secret contract — get in before Friday!" The member shouting the loudest bought his shares yesterday. Two days later the price has collapsed 70%.

(a) What is this scheme called? __________
(b) Who made the money? ______________________________________________________________________________
(c) In this scheme, what are the late buyers really being used as? ______________________________________________________________________________

Exercise 35 — Name the trap, twice. After two months of warm daily messages, an online friend introduces Dana to a trading app "her uncle manages." The balance on screen grows beautifully. When Dana tries to withdraw $5,000, support tells her she must first pay a $400 "verification fee."

(a) The slow, friendly setup is called __________ __________.
(b) The pay-to-withdraw demand is called a __________ __________.
(c) Should Dana pay the $400? __________ What should she do instead? ______________________________________________________________________________

Exercise 36 — Spot the phishing. You get a text: "URGENT: Your brokerage account will be LOCKED. Verify your login within 5 minutes: [link]."

(a) This trick is called __________.
(b) Name the three things Safety: Scams & Protecting Your Money tells you to slow down and check: 1) ______________ 2) ______________ 3) ______________
(c) The safest way to reach your account instead: ______________________________________________________________________________

Exercise 37 — Spot the fake guru. A coach's page says: "GUARANTEED 30% monthly returns — risk-free! We never lose." The page shows only profit screenshots and a rented sports car, and the enrollment discount ends tonight. Name at least three tells that this is a fraud.

______________________________________________________________________________

Exercise 38 — Match the red flag to what it usually means. Write the correct letter for each flag.

Meanings: (A) A pump-and-dump looking for exit buyers · (B) Withdrawal trap — your money is gone · (C) Account takeover attempt · (D) The recruits are the product
(a) Withdrawal requires paying a fee first → __________
(b) A "manager" asks for your login or a screen share → __________
(c) Winning requires recruiting other people → __________
(d) A tiny unknown stock everyone must buy right now → __________

Exercise 39 — Fill in the blanks.

(a) __________ __________ authentication (2FA) means logging in takes two proofs: your password plus a one-time code, usually from an app on your phone — so a stolen password alone is not enough to get in.

(b) The free tool for checking whether a US broker or salesperson is registered is called __________, and it is run by __________.
(c) A real broker lets your money __________ . Test any new platform early with a small __________ .

Exercise 40 — Money rules scenario. Jordan opens his first trading account with a credit card cash advance plus this month's rent money. He keeps no savings outside the account, because "it's all going to work out." Name the three money-rule mistakes from Safety: Scams & Protecting Your Money, and what the chapter says to do instead.

______________________________________________________________________________

Answers

Risk Management A–Z — Risk Management A–Z

1. 10% loss → +11.1% needed ($100 ÷ $900). 20% loss → +25% ($200 ÷ $800). 25% loss → $750 left. 50% loss → +100% ($500 ÷ $500 — you must double what is left). 90% loss → $100 left, +900% needed ($900 ÷ $100). The deeper the hole, the steeper the climb — that is why small losses are cheap and big losses are nearly permanent.

2. (a) 1% of $10,000 = $100. (b) $80 − $76 = $4 per share. (c) $100 ÷ $4 = 25 shares. (d) 25 × $80 = $2,500 — the position costs $2,500, but if the stop at $76 is hit you lose 25 × $4 = $100, exactly as planned. Position size and dollar risk are different things.

3. (a) 0.5% of $4,000 = $20. (b) $25 − $24.50 = $0.50 per share. (c) $20 ÷ $0.50 = 40 shares.

4. (a) 1% of $25,000 = $250. (b) $250 ÷ $6 = 41.67 shares exactly, so you buy 41 shares — always round down, never up. (c) 41 × $6 = $246 of actual risk, safely under the $250 limit.

5. He sized by feel (a round number of shares) instead of by the formula — and he has no working risk limit at all. Risk per share is $50 − $45 = $5, so the correct count is $100 ÷ $5 = 20 shares. Buying 100 shares puts 100 × $5 = $500 at risk — 5% of his account, five times his own rule. One normal losing streak at that size does real damage.

6. Divide the result by the $80 you planned to risk. (a) $200 ÷ $80 = +2.5R. (b) −$80 ÷ $80 = −1R (a normal, planned loss). (c) $40 ÷ $80 = +0.5R. (d) −$24 ÷ $80 = −0.3R.

7. In R: Trade 1 +2R, Trade 2 −1R, Trade 3 −1R, Trade 4 +3R, Trade 5 −0.5R. (a) $100 − $50 − $50 + $150 − $25 = +$125. (b) +2 − 1 − 1 + 3 − 0.5 = +2.5R. (c) You won 2 of 5 trades, a 40% win rate. You finished ahead because your wins were bigger than your losses — +2R and +3R winners pay for several −1R losers.

8. (a) Risk is $30 − $28 = $2 per share; possible reward is $33 − $30 = $3 per share; $3 ÷ $2 = 1.5-to-1. No — it falls short of the 2-to-1 guideline, so per Risk Management A–Z you skip it. (b) Reward is $36 − $30 = $6 per share; $6 ÷ $2 = 3-to-1. Yes — that one clears the guideline.

9. (a) A stop loss. (b) Down about 41% (each loss shrinks what is left: 0.90 five times over leaves about 59 cents of every dollar), and you would need about a 69% gain just to get even. This is why Risk Management A–Z calls 10%-per-trade risk mathematically fatal over a normal losing streak.

10. (a) 3% of $10,000 = $300. (b) $300 ÷ $100 = 3 full losing trades — which is by design, since risking 1% per trade means roughly three losers end the day. (c) 6% of $10,000 = $600.

Trading Psychology & Discipline — Trading Psychology & Discipline

11. Fear (the exit costume). The plan-based move: hold to the plan — the dip to $74.80 never touched her $73.50 stop, so there was nothing to do. The exit belongs at the stop or the target, not at the first pounding heartbeat.

12. Greed. The plan-based move: sell at the planned target and bank the +$150. A target picked calmly in advance is the exit; "what if it doubles?" is not a plan.

13. FOMO — the fear of missing out. The plan-based move: no trade. No plan, no stop, no knowledge of the company means no entry, no matter what the feed is celebrating. A move you missed cost you nothing; there is always another trade.

14. Revenge trading. The plan-based move: stop. A planned −1R loss is a normal cost of business; the correct response is to step away, review later, and let the daily loss limit do its job — never to trade bigger while angry to "make it back."

15. Boredom. The plan-based move: wait. A trader's job is to wait for their setup and then trade it — the quiet hours are part of the job, not wasted time. No setup, no trade.

16. Overconfidence after wins. The plan-based move: run the same checklist and the same size as always. Four or five wins do not change the odds of the next trade, and a hot streak is exactly when discipline matters most.

17. (a) Twice (roughly two times as painful). (b) Holding losers too long (selling means accepting the painful loss, so the pain gets delayed while the loss grows), and selling winners too early (grabbing the gain before the fear of losing it wins). Together they produce big losses and small wins — the exact opposite of what works.

18. Trade A was the good trade. You judge a trade on whether it followed the plan, not on one outcome: a rule-following loss is a normal cost of business, while a rule-breaking win pays you to build a habit — no stop, doubled size — that will eventually send you the real bill.

19. Any four of: the setup traded (or "NOT IN PLAN"), the entry and exit prices, the size, the planned risk and result in R, what you felt before and during the trade, whether you followed your plan, and one lesson. Without those, the entry teaches nothing — it is a complaint, not data.

Trading Plan & Journal — Building Your Trading Plan & Journal

20. (a) 1% of $3,000 = $30. (b) $60 − $57 = $3 per share. (c) $30 ÷ $3 = 10 shares.

21. Answers vary — grade for specific, not for matching these words. Sample: My one setup — "Buy SPY when it pulls back to yesterday's closing price, holds there, and rises back above the pullback's turning point." Daily stop: 2% of $2,000 = $40, and when he hits it he is done for the day. Never list, any one of: never trade money needed for rent, bills, or food; never add to a losing trade; never move a stop-loss further away; never trade tired, sick, rushed, or upset; never buy just because someone online said to.

22. Any three: (1) The "setup" is not a setup — "whenever they look good" cannot be followed word for word by another person. (2) No fixed risk — "whatever feels right" replaces the fixed percentage of the account the plan should name. (3) "$500 every month" is a money goal, which you cannot control and which pushes you to break rules chasing it; the plan needs process goals instead. (4) There is no stop-loss or loss exit — "hold on, it will probably come back" is the most dangerous sentence in trading. (5) There is no daily stop and no "never" list. (Any three, in your own words.)

23. Result R: +$75 ÷ $25 planned risk = +3R. Feeling and One Lesson are yours to write honestly — for example, Feeling: "Calm," One Lesson: "Waiting for the full setup works." Quick check: −$25 ÷ $25 = −1R; +$25 ÷ $25 = +1R.

24. (a) P — journaling is 100% in your control. (b) M — the market does not care about your daily target. (c) P — your risk per trade is your decision on every trade. (d) M — a deadline on your balance is a money goal, and chasing it invites oversizing and rule-breaking.

25. (a) 30 (paper trade first, review them weekly, and only consider real money once you can honestly say you followed your plan on almost every one). (b) On paper, on a weekend (plans change at the desk, not at the screen), never in the middle of a trading session.

Accounts, Margin, Rules & Taxes — Accounts, Margin, Rules & Taxes

26. (a) $20,000 × 1.10 = $22,000. Sell and repay the $10,000 loan: about $12,000 left — a gain of about 20% on your own $10,000, from a 10% stock move. (b) $20,000 × 0.90 = $18,000. After repaying the $10,000 loan: about $8,000 — a loss of about 20% on your own money. That doubling, in both directions, is leverage — and margin interest is owed on top, win or lose.

27. (a) $20,000 × 0.60 = $12,000. (b) $12,000 − $10,000 loan = $2,000 of equity. (c) $2,000 ÷ $12,000 ≈ 17% — below the 25% maintenance floor, so this account gets a margin call. (d) ($10,000 − $2,000) ÷ $10,000 = an 80% loss of your own money, from a 40% stock move. (e) The broker may legally sell your investments for you, at whatever price the market offers, without asking — and it will choose which positions to sell, not you.

28. (a) 50%. (b) $6,000 of your money plus up to $6,000 borrowed = $12,000.

29. (a) T — since May 2024, US stock and options trades settle in one business day: trade date plus one, T+1. (b) F — day-trader rules apply to margin accounts; cash accounts are not flagged, but they have their own settlement limits (Exercise 30). (c) T — that is the classic rule stated correctly, including the honest part: regulators have been replacing the old PDT system with intraday-margin standards, brokers are transitioning on their own schedules, and your broker's current rule is the final word. (d) F — selling is the taxable event. A gain is taxable when you sell, whether the money is withdrawn or still sitting in the account.

30. (a) Yes. She bought Stock B with money from a sale that had not settled, then sold Stock B before that money settled — she sold something she had not fully paid for yet. (b) Tuesday — Monday's sale settles T+1, the next business day. (c) She should have waited until the $500 was settled before selling the new purchase. In a cash account, only trade with settled money; money deposited from your bank and left to settle is always safe.

31. (a) Yes — June 25 is 15 days after the sale, well inside 30 days after. (b) The $400 loss is disallowed for now — it cannot be claimed on this year's taxes. In many cases it is added to the cost of the new shares, so you may effectively claim it later when you sell for good, but the timing surprise is the trap. (And note: the rule watches all your accounts, even an IRA at a different broker — a tax professional earns their fee here.)

32. (a) No — April 20 is past April 4, the 30th day after the sale, so the repurchase falls outside the window (and no substantially identical purchase inside the window is described). (b) 61 days total: 30 days before the sale, the sale day itself, and 30 days after.

33. (a) ST — about ten months, one year or less. (b) LT — more than two years. (c) ST — a same-day trade is as short-term as it gets. Short-term gains are generally taxed like regular income; long-term gains generally get a lower, preferential rate — exact rates depend on your situation and current law, which is why this stays a job for a tax professional.

Safety: Scams & Protecting Your Money — Safety: Scams & Protecting Your Money

34. (a) A pump-and-dump. (b) The organizers — they quietly bought the cheap stock before the hype and sold everything into the crowd's buying at the top. (c) The late buyers are the exit — their buying is what the organizers sell into. Once the organizers are out, there are no big buyers left and the price collapses, usually for good. The louder the urgency about a tiny unknown stock, the more likely you are looking at someone else's exit door.

35. (a) Pig butchering — the "friendship" was the fattening, built over weeks or months to steer Dana onto the platform. (b) A withdrawal trap — there is no real balance to release; the fee is simply the next amount they intend to steal. (c) No. Paying will produce a new fee, not her money. Instead: stop sending money, save every message, and contact her bank and local authorities — speed matters more than embarrassment.

36. (a) Phishing — a fake message built to trick you into handing over your login. (b) Check: 1) the sender and the address (the login page must be your broker's exact website address), 2) the urgency (lock-outs and "act in 5 minutes" pressure are the costume every phishing message wears), 3) the request itself (your broker will never ask for your full password by email, text, or chat). (c) Ignore the link and reach your account the safe way: type the address yourself, use your bookmark, or open the official app.

37. Any three: (1) "Guaranteed" and "risk-free" — anyone guaranteeing profits is lying; real trading always involves risk of loss, so this alone means walk away. (2) Profits shown, losses never mentioned — an edited record, not a track record. (3) The lifestyle is the product — the rented car is the advertisement, not evidence of trading skill. (4) Countdown pressure — the expiring discount exists so you pay while excited instead of thinking. An operation that cannot show a full, verified track record including the losses has already answered your questions.

38. (a) B — withdrawal trap. (b) C — account takeover attempt: no one legitimate needs your login or your screen; a professional who trades client money uses official firm accounts. (c) D — the recruits are the product. (d) A — a pump-and-dump looking for exit buyers.

39. (a) Two-factor authentication. (b) BrokerCheck, run by FINRA (the Financial Industry Regulatory Authority) — free, and it shows registration, history, and complaints or regulatory actions. (c) A real broker lets your money leave; test any new platform early with a small withdrawal.

40. Three mistakes: (1) Borrowed money — a credit card cash advance means he can lose more than he has, plus interest; if losing it puts you in debt, it was never trading money. (2) Rent money — money with a deadline attached forces selling at the worst moments and panic at normal price moves; rent, bill, food, and tuition money never enter a trading account. (3) No emergency fund — the emergency cushion belongs in a plain bank savings account, outside the trading account, so a car repair or a lost job cannot raid a trade and a trading loss can never become a life emergency. The chapter's rule underneath all three: trade only with money you could lose completely without changing your life.