The risk-management ideas behind a Markov signal

Why this article exists

Markov publishes general research, not personalised investment advice. It does not know your income, liabilities, portfolio, goals or risk tolerance, and it does not place orders. This guide explains the risk fields used in the research so they are not mistaken for a promise of safety.

What a structural stop means

A structural stop is a price level at which the setup, as published, is treated as invalidated. Depending on the documented method, the level may reference a recent swing point, a volatility measure such as Average True Range, or another price structure.

A stop is not a guarantee of the execution price. A security can gap through a trigger, liquidity can disappear, and slippage or partial fills can make the realised loss larger than the planned amount.

Position sizing as arithmetic

One common educational formula starts with a risk budget selected by the user:

whole shares = floor((capital × selected risk percentage) ÷ absolute(entry − stop))

The absolute entry-to-stop distance is the planned risk per share. A wider distance produces fewer shares for the same input budget. The formula does not decide what percentage is suitable for a person, and it ignores taxes, brokerage, gaps, liquidity, leverage and existing portfolio exposure.

You can explore the arithmetic with Markov's free position-size calculator.

Why win rate is incomplete

Win rate alone says nothing about the size of gains versus losses. A purely arithmetic expected-value example is:

(probability of gain × average gain) − (probability of loss × average loss)

That identity is not a forecast. Real probabilities and outcomes are unknown, change over time and are reduced by costs. Markov does not guarantee a positive expected value or future return.

Portfolio risks remain

Sizing each idea separately does not address concentration, correlation, sector exposure or several positions moving together during a market shock. A complete risk decision must consider the portfolio, not only one card.

For personal recommendations, consult a SEBI Registered Investment Adviser. For general investor education and risk resources, see the SEBI Investor portal. The formal Markov risk language is on the disclaimer page.