Risking Different Amounts by Setup Grade

[Fairman]

Risking Different Amounts by Setup Grade

Not every trade deserves the same risk. If you've graded your setups, you can adjust position size accordingly, within a strict upper limit.

Here's a simple framework:

A+ setup (all criteria met): risk 1%
B setup (most criteria met): risk 0.5%
C setup (some criteria missing): no trade

Why this can help:

- It aligns risk with the quality of the opportunity
- It reduces losses from weaker trades
- It keeps you involved without overexposing

How to implement it:

1. Create a clear checklist with scoring. For example, give one point for each criterion.
2. Define what score equals A+, B, or C.
3. Record each trade's grade and result in your journal.
4. After at least 50 trades, check whether higher grades actually perform better.
5. If grades don't correlate with outcomes, your scoring needs improvement.

Cautions:

- Do not increase risk beyond your maximum limit just because a trade "feels" perfect
- Avoid inflating grades to justify bigger positions
- Keep the system simple, as complex tiers invite mistakes

Many traders find that their B setups drag down results, and that dropping them entirely is better than reducing size.

Let your data decide. Risk more only where evidence says you have an edge, and never beyond your limit.

[Fairman]

The cap is the part I'd stress. Grading setups only helps if the top grade is still a normal risk. I've seen people call everything A+ by the third week. If your A+ count goes up suddenly, check whether the market changed or your standards did.

[Fairman]

A version that worked for a friend: only two grades, A and B, with B at half risk. Three or four grades got confusing in the moment. With two, the decision is quick and there's less room to talk yourself up. The key is that the grade is decided by the checklist, not by feeling. For example, A needs trend alignment, a tested level and a clean trigger candle, and B is any two of those three. Anything less is no trade. After 50 trades, compare the average R of A and B setups. If they're similar, there's no reason to size them differently.