> ## Documentation Index
> Fetch the complete documentation index at: https://www.questforedge.io/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk per Trade Idea: Beyond Per-Position Limits

> Learn how to group correlated positions and cap the total risk attached to one market thesis, catalyst, or directional exposure.

**Risk per trade idea (RPTI)** is the maximum amount an account can lose across all positions that express the same underlying thesis. It closes a gap left by per-position limits: five individually acceptable trades can still form one oversized bet.

## Why ticket-level risk is incomplete

A platform displays orders separately. Markets do not always behave separately. Positions may share:

* the same currency or interest-rate factor;
* the same equity index or sector;
* the same macroeconomic release;
* the same directional exposure;
* the same strategy signal or entry logic.

If those positions are likely to lose together, summing their nominal ticket limits without grouping them understates concentration.

## Example

A trader risks 0.4% on each of three positions:

* long EUR/USD;
* long GBP/USD;
* short USD/CHF.

Each trade appears to satisfy a 0.5% per-position cap. All three, however, can benefit from U.S. dollar weakness and lose when the dollar strengthens. The economic idea risk may be close to 1.2%, not 0.4%.

Correlation is not constant, and the exact joint loss can differ because of volatility, stop placement, and instrument behavior. The point is to identify shared failure modes before adding exposure.

## A practical grouping method

<Steps>
  <Step title="Name the thesis">
    Write the market condition required for the position to work.
  </Step>

  <Step title="Identify shared drivers">
    Tag the currency, index, sector, catalyst, direction, and strategy.
  </Step>

  <Step title="Estimate loss at invalidation">
    Use stop-based monetary risk plus a reserve for slippage and gaps.
  </Step>

  <Step title="Aggregate related positions">
    Apply a conservative grouping when dependence is uncertain.
  </Step>

  <Step title="Enforce the idea cap">
    Reduce size, remove a position, or decline the new trade when the group is full.
  </Step>
</Steps>

## RPTI is not a correlation model

A full portfolio model can estimate covariance and stress scenarios. RPTI is a simpler operating control. It is useful because it can be applied before a trade without pretending that historical correlations will remain stable during stress.

Good practice combines both approaches: use quantitative analysis where available, and use clear concentration rules where model precision is unreliable.

## Questions before adding a position

* What event or price move would make the existing positions lose together?
* Does the new order add a new source of return, or repeat an existing one?
* What is the total stop-based loss for the group?
* Would the group remain acceptable after a volatility spike or gap?
* How much daily and maximum-loss capacity would remain?

<CardGroup cols={2}>
  <Card title="Correlated risk" icon="link" href="/research/risk-experiments/accounting-for-correlated-risk-in-trading">
    Examine why correlations and common factors matter.
  </Card>

  <Card title="One-side betting" icon="arrows-left-right-to-line" href="/system/prop-trading/one-side-betting-and-correlated-exposure">
    Detect repeated directional exposure across an account.
  </Card>

  <Card title="Position sizing" icon="ruler" href="/documentation/risk-fundamentals/what-is-position-sizing">
    Convert an allowed loss into position size.
  </Card>

  <Card title="EmoGuardian" icon="shield-heart" href="/tools/getting-started/emoguardian">
    Review account-level controls, including trade-idea risk.
  </Card>
</CardGroup>

<Note>
  Risk grouping reduces concentration risk; it does not predict correlation or guarantee that stops will execute at their specified prices.
</Note>