Exposure
Everything the market can take from you right now: the true size of your risk.
Exposure is your total at-risk amount across everything open. Correlated positions multiply it silently, so net it before adding more.
Exposure is the total amount at risk across positions: notional sizes, correlated themes and leveraged tails combined. Three small positions on the same dollar theme carry triple the exposure of one. Professionals manage exposure first and entries second, because returns follow survival.
How It Works
- Sums notionals across all open tickets
- Correlations merge separate tickets into one bet
- Leverage multiplies exposure beyond deposits
Trading Tips
Cap total exposure per theme like a single trade
Recheck after every fill, not just at entry
Cut exposure into weekends and red news
Exposure Example
Say you hold three 1% risk trades all short dollars plus a gold long that also hates dollars. Real exposure approaches 4% on one theme wearing four costumes. One CPI beat stops everything at once.
How Traders Use Exposure
Net exposure to one number per theme before bed and before news. If the number surprises you, the book is too clever. Simple books survive; clever books explain.
Related Terms
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