Define failure before reward
A setup is incomplete until it has a price that proves the thesis wrong. That invalidation level determines stop distance. Stop distance, together with the maximum acceptable dollar loss, determines position size.
This order matters. Choosing shares first and discovering the risk afterward makes exposure expand on volatile stocks—the exact moment when execution and slippage are least forgiving.
The sizing equation
Position size is maximum dollar risk divided by the distance between entry and stop. If the account permits $100 of planned risk and the stop is $0.40 away, the theoretical size is 250 shares. Fees, expected slippage, liquidity, and broker constraints should reduce that number rather than increase it.
- Set a per-trade loss ceiling before the session.
- Set a daily stop that prevents one difficult session from escalating.
- Never move a stop farther away solely to avoid taking the planned loss.
- Grade execution separately from P&L; a controlled loss can be a well-executed trade.
Let volatility change size, not discipline
Two charts can show the same pattern while requiring very different share sizes. Wider candles and faster tape require more room, so the theoretical position must shrink if dollar risk is to remain stable. TraderBase keeps the selected scanner symbol linked to chart, volume, VWAP, catalyst, and risk context so those assumptions can be checked together.
Educational content only. Trading involves substantial risk, and scanner events are not recommendations to buy or sell securities.