These seven laws form a cohesive, volatility-scaled, zone-aligned stop-loss and risk architecture—applicable on any chart or timeframe, in any market.

Law 1: Volatility Unit Law

Definition: One Volatility Exposure = ATR(P), where P is the maximum EMA period in your structural zones (commonly P = 200).
Purpose: Anchors every stop and exit decision to the average range of your full EMA zone.

Law 2: Exposure-Scaling Law

Definition: The number of exposures needed to outlast a normal corrective wave = √P (rounded to the nearest whole number). Example: √200 ≈ 14.14 → round to 15 exposures.
Purpose: Leverages the √time law of volatility to size your initial buffer.

Law 3: Initial-Stop (DAATS) Law

Definition: Initial stop distance (DAATS) = Total Exposures × ATR(P)
DAATS = (√P exposures) × ATR(P)
Purpose: Places your stop outside even the deepest one-leg retracement in the full EMA zone.

Law 4: Breakeven-Fraction Law

Definition: Select a Local Exposure Count L (empirically optimized). Once price moves in your favor by L × ATR(P) (i.e. L/Total Exposures of DAATS), shift your stop to breakeven.
Breakeven Trigger = Entry Price + L × ATR(P)
Purpose: Locks in zero risk only after the trade has covered its initial full-zone buffer.

Law 5: Trailing-Exposure Law

Definition: After breakeven, trail your stop by the same Local Exposure Count L × ATR(P) behind price—never loosening on pullbacks.
Purpose: Keeps winners running under the same proven local volatility conditions.

Law 6: Tiered-Risk Allocation Law

Definition:
Position Size = (Free Equity × Risk %) ÷ DAATS
Choose Risk % from three stages:
• Stage 1: 0.01 %–0.09 %
• Stage 2: 0.10 %–0.90 %
• Stage 3: 1.00 %–9.00 %
Purpose: Balances large stop distances with strict capital-at-risk control.

Law 7: Universe Volatility Law

Definition:
1. Compute each instrument’s DAATS = √P × ATR(P).
2. Treat all N instruments as one population; calculate population standard deviation σₚₒₚ of their DAATS values (divide by N).
3. Normalize:
GNASD = σₚₒₚ ÷ N
Application: Use GNASD (and Fibonacci multiples) only for cross-instrument breakeven triggers or portfolio-level risk overlays—never for single-instrument initial stops.
Purpose: Provides a unified, data-driven “noise budget” across your entire trading universe.

About the Author

Dr. Glen Brown is President & CEO of Global Accountancy Institute, Inc. and Global Financial Engineering, Inc., with over 25 years of executive leadership and quantitative research in finance and trading. Holding a Ph.D. in Investments and Finance, he pioneered multi-asset proprietary trading strategies and developed the Global Elite Proprietary Trading Program (GEPTP). As Chief Financial Engineer, Head of Trading & Investments, Chief Data Scientist, and Senior Lecturer, Dr. Brown blends hands-on innovation with academic rigor. His guiding maxim—“We must consume ourselves in order to transform ourselves for our rebirth”—drives his holistic approach to professional growth, market analysis, and technological integration. Numerologically aligned with Master Number 11 and Life Path 4, he unites visionary insight with disciplined execution to shape the future of financial markets.

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Global Accountancy Institute, Inc. and Global Financial Engineering, Inc. operate exclusively as internal proprietary trading firms. We do not offer courses, advisory services, or products to the general public. All frameworks, laws, and methodologies shared here are for in-house research, education, and the development of our professional trading desks.

Risk Disclaimer

Trading derivatives and CFDs involves substantial risk and may not be suitable for every investor. This article is for educational purposes only and does not constitute financial advice. Always perform your own due diligence and consult a licensed professional before making any trading decisions. Past performance does not guarantee future results; you assume full responsibility for any trades you execute.

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