Grading & sizing your plays

1 Why grade

Not every instance of a play is equal

Even a single, well-defined play shows up in stronger and weaker versions. The same breakout with a fresh catalyst, heavy volume, and an aligned market is a different bet than the same pattern in chop with no news. Grading is how you measure that difference before you size — so your biggest risk goes on your best looks.

The deep theory lives on the grading & sizing concept page (and ties to expected value and the Kelly idea of betting in proportion to edge). This lesson is the applied version: how to build a grade into each play in your book.

2 A simple scale

A+ / A / B / pass

Keep the scale coarse. A+, A, B, and "pass" is plenty — finer grades create false precision. What matters is that the grade is decided by a written checklist, not a feeling.

3 Build a grade checklist into the play

Objective factors, counted

For each play, list the factors that make it stronger, and grade by how many are present. The factors are specific to the play, but they usually come from a few families:

• ·Context alignment. Is the broader market / sector pushing the same direction? An aligned backdrop upgrades the grade.
• ·Catalyst quality. Fresh, meaningful news vs. none — and how big. A real catalyst often separates an A+ from a B.
• ·Confirmation. Volume, relative strength, a clean level — the evidence the move is real, not random.
• ·Reward-to-risk. How far is the logical target vs. the stop? A tight, well-defined stop with room to run upgrades the trade.
• ·Cleanliness. Is the chart textbook, or messy and overlapping? Discretionary "ugliness" is a real downgrade.

Write the rule explicitly, e.g.: "A+ = all five present; A = four; B = three; fewer than three = pass." Now the grade — and therefore the size — is objective and repeatable.

4 The cardinal rule

Size sets risk; the stop sets shares

Grading changes how much you risk (your R), never how you compute the position. The order is always: pick the grade → that sets your risk in % terms → the distance to your stop converts that risk into a share or contract count. You never start from "I want X shares." This keeps every trade — A+ or B — inside the same survivable framework. Review the mechanics on risk & position sizing if it's not yet automatic.