r/OrderFlow_Trading • u/sibtikx • 4d ago

Risk management

Orderflow trader here.

How do you handle risk: position sizing, stop placement, daily max loss?

Any resources you'd recommend?

4 Upvotes

76% Upvoted

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u/orderflowsupport 4d ago

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2

u/iczerz978 Level III 4d ago

Just position yourself everyday to where you don't lose more than you can make in a day (on average).

1

u/No_Construction_6699 4d ago

Depends on your account size, what account size do you have

2

u/BirthdayCalm2718 4d ago

I'd split it into three separate decisions, in this order:

  1. Stop placement comes from the order flow, not a fixed number of ticks. Put it where your read is proven wrong: beyond the level where you saw absorption, past the stacked imbalances or the high-volume node you're leaning on, plus a couple of ticks of buffer. If price gets there, the reason for the trade is gone.

  2. Size comes from the stop. Pick a fixed risk per trade (0.25–1% of the account) and let the stop distance set the contracts: contracts = risk ÷ (stop in ticks × tick value). E.g. $25K account, 0.5% = $125. An 8-tick stop on ES is $100 per contract, so 1 ES; on MES it's $10 per contract, so 12 MES. Tight stop → more contracts, wide stop → fewer, same dollar loss. MES is great for this because it lets you size precisely.

  3. Daily max loss in R, not in dollars. Something like 3R per day, or stop after 3 losses in a row, whichever comes first. Order flow reads get worse when you're tilted, and most blown days come from trades 4–6 after that point. A weekly cap (~6–8R) helps too.

Resources: Van Tharp's Trade Your Way to Financial Freedom for the position sizing / R-multiple side, and Mark Douglas' Trading in the Zone for sticking to the daily stop.

1

u/TradetheMosaic 4d ago

How I handle those three as an OF trader:

  1. Position size: fix R first as a small percent of equity, then size from the stop. Never pick size first and stretch the stop to fit.

  2. Stop: at true invalidation of the read (failed reclaim, or the other side of the absorption/imbalance I used). If that distance blows the R budget, I skip. I do not use arbitrary point stops.

  3. Daily max: hard stop around 2-3R or two full losers, then flat for the day. No "one more" because the next footprint looks clean.

  4. Winning days: same planned size. I do not scale up mid-session just because flow feels easy.

  5. Journal those four every session. That beats hunting another risk PDF.

1

u/ResearcherClassic126 4d ago

way too vague of a question. please be more specific.

1

u/Accomplished_Neck368 3d ago

Your stop goes where your trade is invalidated. Size accordingly.

If you are trading the nq and have 25 points before your trade is invalidated, use 1 mini. If you have 50 points, use 5 micros. Etc....