FXRISK Manual

Your Portfolio Risk Is Net Exposure, Not Trade Count

Three positions can be one trade if they share the same driver; risk adds by exposure, not by how many tickets you opened.

2 min
Structure FX Crypto
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Mechanism

Diversification fails when exposures overlap. In FX, overlapping pairs often share a dominant leg (USD) or a shared risk regime (risk-on).

In equities, different tickers can share the same factor (beta, rates sensitivity, growth). In crypto, alts often share a single liquidity driver.

When drivers overlap, you’re concentrated. You only feel diversified because the labels differ.

Process upgrade: turn this truth into a rule you can actually enforce. If the rule can’t be enforced, it will be broken under stress.

  • Write the trigger condition in observable terms.
  • Write the action in one sentence.
  • Write the penalty for breaking it.
How it kills accounts

Add ‘different’ trades → hidden shared driver → driver moves → multiple positions lose together → drawdown accelerates → forced de-risking.

How it kills accounts:

  1. The rule exists only in your head.
  2. Stress arrives and you improvise.
  3. Improvisation becomes inconsistency.
  4. Inconsistency becomes random results.
  5. Random results become a slow bleed.
Rule that survives

Cap exposure by driver (USD, rates, beta, volatility), not by instrument name.
Assume correlations increase under stress.
If you can’t explain the driver, reduce size or don’t add the position.

Rule that survives:

  • Write the trigger in observable terms.
  • Write the action in one sentence.
  • Write the penalty for breaking it.
Example archetype

You’re long EURUSD, GBPUSD, and AUDUSD and you feel diversified. A USD funding bid hits; all three drop together. Your “three trades” were one USD short.

Tell: if your rule isn’t enforceable, it’s a suggestion. Suggestions don’t survive stress.

Deep dive

Driver mapping

Write the driver in one line: “I am long X because Y.” If two trades have the same Y, you are concentrated.

Related: Diversification collapses in crisis.

Glossary: correlation, positioning.

Field checklist

  • Write the rule in observable terms: if X, then Y.
  • Remove choices under stress. Choices become rationalizations.
  • Track the precursor: what state were you in before the mistake?
  • Make deviations costly (size down, pause, review).
  • Turn lessons into gates, not notes.

Related truths