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Trade Wzrd

Reference

Risk Management

Risk management best practices for Trade Wzrd automation - position sizing, stop loss strategies, and drawdown management.

Risk Management

Risk management is the most important part of automated trading. No strategy can survive poor risk management long-term.

The Golden Rule

Never risk more than 1-2% of your account balance per trade.

For a $10,000 account, that means a maximum loss of $100-$200 per trade.

Position Sizing Methods

1. Fixed Lots (VOL)

Always trade the same lot size regardless of account balance.

Simple but doesn’t scale. As your account grows, the relative risk decreases. As your account shrinks, the relative risk increases.

2. Risk Percentage (RISK) - Recommended

Calculate lot size based on a percentage of your account balance and the stop loss distance.

RISK=1 means you risk 1% of your balance on this trade. Trade Wzrd calculates the correct lot size automatically based on your account balance, the SL distance, and the symbol’s pip value.

This method scales with your account - if your balance doubles, lot sizes double; if it halves, lot sizes halve.

You can use either VOL or RISK (or both) - at least one is required for open orders.

3. Proportional Scaling (Copy Trading)

Used in copy trading with Proportional mode. Lot sizes scale proportionally based on the ratio between sender and receiver account balances.

Stop Loss Strategies

Fixed Pips

Simple and consistent. Works well with strategies that have a defined edge with fixed stop distances.

Support/Resistance Levels (Price)

Place stops beyond key levels using price values:

ATR-Based

Use Average True Range in Pine Script and pass as pip value:

Always Use a Stop Loss

Never send an open signal without a stop loss. While the parser allows it (SL and TP are optional), automated trades without SL can result in catastrophic losses.

Understanding TPSLTYPE

The TPSLTYPE parameter controls how SL and TP values are interpreted:

Value Behavior
PRICE (default) SL/TP are price levels (e.g. SL=1.0800)
PIPS SL/TP are pip distances from entry (e.g. SL=100)

The default is PRICE, not pips. If you’re used to thinking in pips, always include TPSLTYPE=PIPS.

Risk:Reward Ratio

Aim for a minimum 1:2 risk:reward ratio - risk $1 to make $2.

This means you need a win rate above 34% to be profitable. A 1:3 ratio requires only 25%.

Max Positions and Drawdown Management

Set thresholds for when to stop trading:

  • Daily drawdown limit - stop sending signals if daily loss exceeds a threshold
  • Weekly drawdown limit - pause automation for the week if cumulative loss exceeds a threshold
  • Consecutive losses - pause after N consecutive losing trades

Implement these in your TradingView strategy or Pine Script logic. You can use CLOSEALL as an emergency stop:

Close Only Losing Positions

Close Only Winning Positions

Breakeven Management

Move your stop loss to breakeven when a trade moves in your favor to lock in profits:

Use OFFSET to add a small buffer above/below entry to cover spread. You can also filter by direction:

Common Mistakes

  • Over-leveraging - using lot sizes too large for your account balance
  • No stop loss - sending signals without SL, risking the entire position
  • Wrong TPSLTYPE - forgetting that the default is PRICE, not PIPS
  • Revenge trading - increasing risk after losses to “win it back”
  • Not tracking performance - use the Dashboard widgets and Alerts page to monitor results
  • Ignoring correlation - opening multiple positions on correlated pairs amplifies risk
  • Changing strategy too often - give your strategy enough time to prove itself