Back to Learn

Risk & Costs

CFD-First Approach

CFD Specific
Cost Model
Critical Logic

Where Good Signals Die

This is where most "good signals" fail. Even perfect entries become losing trades when costs eat your edge. Treat risk management as core logic, not an afterthought.

Invalidation is Mandatory

Every trade must have a clear invalidation level with technical justification + spread buffer.

Position Sizing > Entry

How much you risk matters more than where you enter. Size positions based on invalidation distance.

Max Daily Loss Cap

Circuit breaker stops all trading after hitting daily loss limit. Prevents revenge trading.

No Doubling Down

Never add to losing positions. If wrong, accept the loss and move on.

Cost Model

For each alert, we estimate the true cost of entering and require sufficient expected move to justify the trade.

Total Cost

cost = spread + slippage_buffer

The minimum price must move in your favor just to break even.

Slippage Buffer

slippage = max(spread, 0.05 × ATR₁₄)

Account for execution slippage, especially in fast markets.

Minimum Expected Move Requirement

expected_move_to_T1 ≥ 3-5 × cost

For CFDs, require the expected move to Target 1 to be at least 3-5x the total cost. This ensures your edge isn't eaten by costs.

CFD-Specific Filters

Spread Percentile Filter

Skip if spread > P90 of last 7 days for that hour. Spreads widen during illiquid periods.

Rollover Window Filter

Skip around daily rollover (typically 21:00-22:00 UTC). Spreads spike and data can be unreliable.

High Volatility Filter

If ATR spikes > X, widen invalidation or skip entirely. Extreme volatility = extreme slippage.

Risk Templates

Recommended risk per trade based on account strategy:

Conservative
0.25-0.5%

For new strategies or low confidence. Preserves capital while learning.

Standard
0.5-1.0%

For proven strategies with established edge. Standard position sizing.

Aggressive
>1.0%

Discouraged until proven edge. High risk of ruin.

Circuit Breakers

Automatic protection to prevent catastrophic losses:

  • 3 Consecutive Losses— Stop alerts for the session
  • -2R Day— Stop alerts until next session
  • Spread Spike— Suppress alerts until spread normalizes
  • Volatility Explosion— Pause alerts, reassess regime

Time Stops

If price doesn't move toward T1 after N candles:

  • Exit the position to avoid "chop bleed"
  • Flag the trade as "stale" in outcome tracking
  • Typical time stop: 20-30 candles on entry timeframe without progress