Glossary
Terms, defined plainly
- InvalidationRisk
- The pre-defined price at which a trade idea is objectively wrong; the basis for stop placement and sizing.
- Lesson: Risk management and invalidation in SMC
- Position sizingRisk
- Choosing share count from portfolio risk budget divided by the per-share distance to invalidation.
- Lesson: Risk management and position sizing
- Reward-to-riskRisk
- Expected gain to target divided by the loss to invalidation, measured before entering.
- Lesson: Risk management and position sizing