// Overview
We don’t size by feeling — we size by risk tier. Fix account risk (%R) first, then compute quantity from distance-to-invalidation. Volatility doesn’t scare you when it’s priced into the position.
// Framework
Fixed Account Risk (%R)
Pick a base risk per trade (e.g., 0.5%–1.0% of account) before the session begins.
Risk $ = Account * %R. Quantity = Risk $ / (Entry − Invalidation).
Volatility-Aware Sizing
Use distance-to-invalidation (structure) or a vol proxy (ATR) to avoid oversizing in fast tape.
Wider stops → smaller size; tighter stops (with structure) → larger size.
Max Concurrent Risk
Cap total open risk (e.g., 2% account across all positions). New setups wait if cap is reached.
Correlated names count as one basket.
Daily Loss Guard
Hit −2R to −3R on the day? Flat. System integrity > revenge entries.
Tomorrow’s clarity beats today’s tilt.
// Risk Tiers
Tier 1 // A-Setup (Structure + Time + Liquidity)
Risk: 1.0R (full) • Context: HTF level + session window + clean invalidation.
Notes: Eligible for add-on only after acceptance beyond first objective.
Tier 2 // B-Setup (Structure + Time)
Risk: 0.5–0.7R • Context: Good read, one piece missing (e.g., thinner liquidity).
Notes: No add-on until market confirms.
Tier 3 // Probe (Information Trade)
Risk: 0.25–0.33R • Context: Testing a level/behavior with tight invalidation.
Notes: Expect scratch-outs; data > dollars.
Tier 0 // No-Trade
Risk: 0R • Context: Chop, unclear structure, pre-news, or you can’t state the plan in one sentence.
Notes: Capital and mental bandwidth preserved.
// Common Mistakes
Mood-Based Sizing
Feeling “confident” isn’t a tier. If it’s not in the rubric, it’s not in the size.
Equal Dollar Positions
Same notional, different stop width = random risk. Use distance-to-invalidation.
Correlated Stack
Three alt longs moving with BTC dominance ≠ diversification. Count the basket.
Ignoring Daily Guardrails
After −3R, you’re not trading — you’re negotiating. Close shop.
// Checklist
Before Entry
Tier? %R? Basket correlation? Distance-to-invalidation measured?
Position size computed from Risk $ / stop width. Plan written.
After Entry
No add-ons until acceptance beyond objective. Keep total open risk ≤ cap.
Hit daily loss guard? Flat. Review, don’t retry.
