The Risk Desk: A Working Sequence

Six marks before entry

This sequence is used throughout the Chart Risk Workshop. It is not a setup and does not identify what to buy or sell. It is a readiness check for a trade idea produced by your own method.

1. State the thesis. Write one sentence describing the chart condition you expect to persist or change.
2. Mark invalidation. Identify observable price behaviour that would make that sentence false.
3. Measure distance. Calculate the distance from intended entry to the exit area, including a realistic allowance for execution.
4. Set account risk. Choose the maximum capital exposure according to your written rules, before considering expected profit.
5. Calculate units. Derive position size from risk divided by stop distance; reduce further where gaps or liquidity warrant it.
6. Write the response. Decide what you will do if price reaches the level. Avoid language such as “wait and see.”

The red-pencil audit

After the trade, keep the original marks. Add realised entry, exit, fees, and any change in size or stop. Circle deviations in red and explain the information that prompted them. The purpose is not self-criticism. It is to distinguish a change based on new evidence from one based on discomfort.

Bring this sequence to a Chart Risk Workshop and apply it to a chart you nearly traded.