Why I Never Risk More Than 2% on Anything

Hey, it's Blake.

My students think I'm calculating trade entries when they see me doing math on my screen.

Actually, I'm calculating how much I'm willing to lose before I even think about what I might make.

"$4,000 account, 2% portfolio risk, that's $80 maximum per trade," I tell them while walking through position sizing. "If I'm doing a four-point body on the micros, that's $20 per trade risk. So I can do four contracts."

They're expecting market direction or technical setups. Instead, they're learning the most important lesson about anything - not just trading.

You should know what your portfolio risk is. That's the maximum you should put on the table.

The Math That Changes Everything

I didn't always think this way. Early on, I'd risk whatever felt "reasonable" - sometimes $50, sometimes $200, sometimes "just this once" $500 because the setup looked perfect.

You know what happened. String of winners, get confident, size up, then hit the inevitable loser that wiped out weeks of gains.

The breakthrough: treating my entire life like one big portfolio where every decision was a position.

Portfolio risk: 2% maximum on any single decision. Not just trades. Anything.

Position Sizing for Life

"Each trade could have a different stop-loss, and therefore we're gonna calculate that. Each trade's different, but your total risk stays constant."

The size of your bet should match the certainty of your knowledge.

I applied this buying my house. Total exposure hit 15% of net worth - way over threshold. So I waited six months, saved more, found better property at lower price. The 2% rule forced patience. Patience created better outcomes.

The "Committed Patterns" Filter

I teach traders to look for "larger than normal" signals - unusual activity indicating big players are making moves.

"If I see a larger group of committed traders, I want to be behind them, not in front of them."

Same everywhere: Only make major moves when you see committed patterns from people with more resources.

Job hunting? Look for committed hiring patterns - multiple roles, funding rounds, expanding teams.
Investing? Follow where institutional money moves, not retail hype.
Business? Enter markets where established players invest heavily, proving demand.

The Stop-Loss Life Philosophy

"I want your stop losses to be where you would take an opposite trade."

If you're bullish on a stock, your stop-loss should be where you'd go short. This forces clarity about conviction before emotions hit.

Applied everywhere:

Job: Stop-loss is when I'd warn friends against working there
Investments: Stop-loss is when I'd short the position
Relationships: Stop-loss is when I'd set up friends with other people

Why Survival Beats Everything

Normal thinking: "How much can I make?"
My thinking: "How much can I lose, and can I afford that loss?"

This isn't conservative. It's antifragile thinking. My students aren't trying to get rich quick - they're trying to not go broke while getting rich slowly.

The real edge isn't being right more often. It's surviving being wrong.

"This system only needs to be right one out of three times. And this is right about 45% of the time."

With slight edge and strict risk management, time does the heavy lifting.

Your Decision Framework

Before any major decision:

Portfolio risk tolerance: 2% of everything I have
Maximum cost: Include opportunity cost and time
Position size: Scale to conviction level
Stop-loss: Pre-define exit criteria
Committed patterns: Are smart money/people making similar moves?

The Defense Against Optimism

Every opportunity is pitched as "can't miss." Every move is "now or never."

The 2% rule defends against FOMO, urgency tactics, and your own optimism bias.

Most people are fragile. One bad decision wipes out decades. My approach makes you antifragile: protected downside, patient upside, mathematical edge through repetition.

Calculate everything. Risk little. Compound relentlessly.

That's not just my trading philosophy. That's my life philosophy.

And it works.

Stay Frosty,

Blake Young

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