Intermediate2 min readLast updated: 2026-06-10
SMC Risk Models — Complete Guide
Master risk management in SMC. Learn structural stop placement, invalidation-based stops, position sizing, and risk per setup grade.
SMC Risk Management
In SMC, risk management uses structural invalidation rather than arbitrary pip distances. Your stop goes where your thesis is WRONG — beyond the structural level that would invalidate the setup.
Stop Placement in SMC
| Setup Type | Stop Location | Why |
|---|---|---|
| OB entry | Beyond the OB (body, not wick) | OB violated = thesis wrong |
| FVG entry | Beyond the FVG range | FVG broken = imbalance filled |
| Sweep entry | Beyond the sweep wick | New low/high = not a sweep |
| CHOCH entry | Beyond CHOCH swing point | Structure not actually shifted |
| Breaker entry | Beyond the Breaker zone | Breaker failed |
Position Sizing Formula
Lot Size = (Account × Risk%) ÷ (Stop pips × Pip value)
Example:
- Account: $10,000
- Risk: 1% = $100
- Stop: 25 pips (OB width + buffer)
- Pip value: $10/lot
- Size: $100 ÷ (25 × $10) = 0.40 lots
Risk Per Setup Grade
| Grade | Criteria Met | Risk |
|---|---|---|
| A+ | 5/5 confluences, Kill Zone, CHOCH confirmed | 1-2% |
| B | 3-4 confluences, good but not perfect | 0.5-1% |
| C | 2-3 confluences, uncertain | 0.25-0.5% or SKIP |
Rules
- Max 1-2% per trade — non-negotiable
- Max 3% daily loss — stop for the day
- Max 5% weekly loss — reduce size next week
- Correlated pairs count as ONE risk unit
- Wider stop = smaller size (never remove stop)
- Break-even after 1R gained
Related Topics
- Entry Confirmation — Quality grading
- Order Blocks — OB-based stops
- Advanced Execution — Entry models affect risk