Advanced Iron Condors, Trading Concepts by Todd Mitchell
- The first is general risk management. In this layer, you define how much you can risk on one trade.
- The next layer is static risk management. You basically ask yourself, “What is the stop value at which I can remove one of my credit spreads and roll it out further in distance?”
You then top this foundation by determining how much dynamic risk you can tolerate. You also find out if you can add any hedge positions to neutralize your risk.
- Next up is a dynamic risk management layer. You see, certain positions placed ahead of time can not only dynamically grow in value, but also help defend against a deep attack on your credit spread positions.
I call these your “sleep-at-night” positions.
- You then conclude with active risk management. This final step involves evaluating the potential reward of staying in a position longer versus the potential risk of additional market movement, as well as when it’s time to close your position for maximum profits
Here’s what you’ll get: