8.6The TLHQ Risk Framework
- ·The four questions asked before every trade
- ·Why upside is assessed last
- ·How the framework enforces consistency
Before every trade:
- 01What can I lose?
- 02Where am I wrong?
- 03How much capital is exposed?
- 04Does this trade fit my risk rules?
Only then: What can I potentially make?
Risk first. Opportunity second.
A setup with attractive upside that breaks your risk rules is not a trade — it is a rule violation with a good story.
Examples use historical or illustrative data only. They are not live market signals.
Add the four questions to your pre-trade checklist and answer them in writing for your next trade.
In the TLHQ framework, potential profit is assessed:
A setup offers a large potential move but requires triple your normal risk. What does the framework require?
- 01Four risk questions precede every trade.
- 02Upside is the final consideration.
- 03Rules are not negotiable per setup.
Educational content only. Nothing here is financial advice or a recommendation to trade. Trading involves risk of loss, results vary between individuals, and past performance does not indicate future results. Only capital you can afford to lose should be exposed to market risk.