Professional Position Sizing & Risk Management System
Signal | Condition | Action |
---|---|---|
Long Entry | Price exceeds 20-day high | Buy 1 unit at market |
Short Entry | Price breaks below 20-day low | Sell short 1 unit at market |
Initial Stop | 2 ATR from entry price | Place stop loss order |
Entry Timing | Actual breakout only | No anticipation allowed |
Signal | Condition | Action |
---|---|---|
Exit Long | Price breaks below 10-day low | Sell all units at market |
Exit Short | Price breaks above 10-day high | Cover all units at market |
Stop Loss | Price hits 2 ATR stop | Exit entire position |
Drawdown Exit | Account drawdown reaches 20% | Close all positions |
Level | Entry Condition | Position Size | Stop Adjustment |
---|---|---|---|
Initial Entry | 20-day breakout | 1 unit | 2 ATR from entry |
First Add | +0.5 ATR profit | +1 unit (2 total) | Move to breakeven |
Second Add | +1.0 ATR profit | +1 unit (3 total) | Trail by 1 ATR |
Final Add | +1.5 ATR profit | +1 unit (4 total) | Trail by 1.5 ATR |
Limit Type | Maximum | Action if Exceeded |
---|---|---|
Per Trade Risk | 1% of equity | Reduce position size |
Per Market Units | 4 units | No additional pyramiding |
Correlated Markets | 6 units combined | Skip new signals |
Total Portfolio | 20 units | No new positions |
Drawdown Action | 10% = reduce, 20% = stop | Scale down or exit all |
Correlation Level | Coefficient Range | Maximum Combined Units | Example Markets |
---|---|---|---|
Very High | > 0.80 | 2 units | CL & BZ, GC & SI, ES & NQ |
High | 0.60 - 0.79 | 3 units | RB & HO, ZC & ZS, 6E & 6S |
Moderate | 0.40 - 0.59 | 4 units | GC & 6E, CL & ES, ZW & ZC |
Low | 0.20 - 0.39 | 6 units | CT & GC, LE & ZB, SB & NQ |
Negligible | < 0.20 | No restriction | OJ & 6J, HE & NG, CC & YM |
CL, BZ, RB, HO, NG
GC, SI, PL, PA
ZC, ZS, ZW, ZM, ZL
CT, KC, SB, CC, OJ
LE, GF, HE
ES, NQ, YM, RTY
6E, 6B, 6J, 6A, 6C
ZB, ZN, ZF, ZT
ATR measures market volatility by decomposing the entire range of an asset price for that period.
A valid breakout occurs when price exceeds the highest high (for longs) or lowest low (for shorts) of the past 20 trading days.
Stops are placed 2 ATR from entry price to allow for normal market volatility.