Lab · Risk management

Risk Lab

The system tells you where to enter. Risk management decides whether you're still trading next year. This is the sequence to run before every order — the default is 1% risk per trade, the same as the tested system.

1 · Account → risk → stop → size → target

Account size
$10,000
Risk per trade
1% = $100.00
Stop distance
3.00
Position size
33 units
Target
3R at 109.00
If target hits (3R)
+$300.00
The math
LONG
Cash at risk = $10,000 × 1% = $100.00
Stop distance = |100.00 − 97.00| = 3.00
Position size = $100.00 ÷ 3.00 = 33.33 units
Order value = 33.33 × 100.00 = $3,333.33

Notice the order: the stop comes first (from the chart or ATR), and the size follows. A wider stop means a smaller position, not a bigger loss. Every trade risks the same 1%.

LevelPriceDistanceP/L
Stop −1R97.003.00−$100
1 : 1103.003.00+$100
1 : 2106.006.00+$200
1 : 3109.009.00+$300
1 : 5115.0015.00+$500
Risk ladder
Stop −1R97.00Entry 0R100.00+1R · +$100103.00+2R · +$200106.00+3R · +$300109.00+5R · +$500115.00Risk = 1R

R is your unit of risk. Measuring in R instead of money makes every trade comparable: one 3R winner pays for three losers.

2 · Why being right often isn't everything

Try the system's numbers

Approximate figures from backtests. Past results don't guarantee future performance. See the backtest →

Win rate
45%
Reward : risk
1 : 3.0
Expectancy per trade+0.80R
Break-even win rate25.0%
Result after 200 trades116.0R
Longest losing streak10
Max drawdown14.0R

Reshuffle to see a different sequence with the same odds. The edge is unchanged — the path isn't. That's what probability feels like in live trading.

You: 45% wins · 1:3.0 “Often right”: 70% wins · 1:0.35
0R119R-18R200 trades →

Being right 70% of the time while taking small wins and full losses slowly bleeds the account. A system that wins less than half the time, but wins bigger than it loses, grows. Trading is a game of probability and risk control, not a game of being right every time.

3 · Expectancy map

Win rate ↓ · Reward:risk →1:0.51:11:1.51:21:31:5
30%-0.55R-0.40R-0.25R-0.10R+0.20R+0.80R
40%-0.40R-0.20R+0.00R+0.20R+0.60R+1.40R
45%-0.33R-0.10R+0.13R+0.35R+0.80R+1.70R
50%-0.25R+0.00R+0.25R+0.50R+1.00R+2.00R
60%-0.10R+0.20R+0.50R+0.80R+1.40R+2.60R
70%+0.05R+0.40R+0.75R+1.10R+1.80R+3.20R

Expectancy = win% × reward − loss% × 1R · Green = sustainable · Red = a slow leak · Outlined = roughly where our system sits