Position Sizing
& Risk Tiers
// Signal over hype. Capital over clout.
// Overview
We don’t size by feeling — we size by risk tier. Fix account risk first, then compute quantity from distance-to-invalidation. Volatility is priced into the position, not into your mood.
// Essentials
Base Risk (%R): Choose 0.5–1.0% per trade before the session. Risk $ = Account × %R.
Position Size: Risk $ ÷ Stop Width (entry → invalidation). Wider stop = smaller size.
Max Open Risk: Cap basket exposure (e.g., ≤ 2% total). Correlated names count as one.
Daily Guardrails: At −2R to −3R on the day → flat. System integrity over tilt.
// Risk Tiers
Tier 1 — A-Setup (Structure + Time + Liquidity)
Risk: 1.0R (full). Notes: Add only after acceptance beyond O1.
Tier 2 — B-Setup (Structure + Time)
Risk: 0.5–0.7R. Notes: Good read, one piece thin; no add until confirm.
Tier 3 — Probe (Information Trade)
Risk: 0.25–0.33R. Notes: Tight invalidation; data > dollars.
Tier 0 — No-Trade
Risk: 0R. Notes: Chop/unclear; you can’t state the one-sentence plan.
// Common Mistakes
Mood-Based Sizing
“Confident” isn’t a tier. If it’s not in the rubric, it’s not in the size.
Equal Notional, Random Risk
Same dollars, different stop widths → roulette. Use distance-to-invalidation.
Correlated Stack
Three alts that move with BTC = one basket. Count it that way.
