Risk Management Framework#

Position Sizing Rules#

Hard Rules#

Never Break These Rules

• No single position larger than 5% of account
• No more than 3 correlated positions simultaneously
• Always have a defined exit before entry

Stop Loss Philosophy#

• Mental stops are acceptable for experienced traders
• Hard stops on volatile days or news events
• Time-based stops for theta decay positions

Recovery Protocol#

When drawdown exceeds 10%:

1. Reduce position sizes by 50%
2. Focus only on highest conviction setups
3. Review recent trades for pattern errors
4. Return to normal sizing only after 5 consecutive profitable days