Position sizing math.

Most new traders pick a position size first ("I'll do 2 contracts") and then figure out where their stop goes. That's backwards. Stop comes first. Size follows. Once you flip that mental model, your account stops bleeding to size mistakes.

The 25% rule.

Never risk more than 25% of your daily loss limit on any single trade. That's the rule. It's that simple.

If your daily loss limit is $1,000, you can risk up to $250 per trade. That means you have room for 4 max losses before you hit your daily stop. Realistically you'll never take 4 losses in a row because you'll be following the other rules (more on that below) — but the math gives you space.

Why the stop matters more.

Your entry can be off by a few points and the trade still works. Your stop can't. If your stop is in the wrong place, you either get clipped on noise or you lose way more than you should.

Here's the order I use, every single time:

The NQ stop loss rule.

On 1-hour levels and above, use a 15-20 point stop loss minimum. Premium volatility is rough right now and a 10-point stop will get smoked.

The 1:3 minimum RR.

Every trade I take needs a minimum 1:3 risk-to-reward. That means if I'm risking 15 points, I need at least 45 points of target before I take the trade.

Why 1:3? Because at 1:3, you can lose 70% of your trades and still be profitable. The math forces you to filter out marginal setups and only take ones with real room to run.

Trail aggressive.

Once you're in a position and price moves in your favor, trail your stop to newly formed highs and lows. Don't sit and pray. Don't move the stop further out hoping for more. Trail to the most recent structure point — if price wants to keep going, your stop won't get hit. If price reverses, you exit with profit instead of giving it all back.

Putting it all together.

Here's how the math runs in practice on a $1,000 daily loss limit account:

• Max risk per trade: $250 (25%)
• 1H level identified, stop 15 points away
• 15 points × $20 = $300 risk per contract
• $250 ÷ $300 = 0.83 contracts → round DOWN to 0
• Either pass on the trade OR find a tighter level (5M structure inside the 15M move)

The contracts come out of the math, not your gut. If the math says 0, you don't trade. That's the entire game.

Bottom line.

Risk is a math problem. Stop placement determines size. Size determines whether you blow your account on a normal pullback. Get this wrong and no strategy will save you. Get this right and even a mediocre strategy becomes profitable.

// — HIGO