risk managment

Ernie: I decide where the stock will be stopped, and estimate my probable entry point. Then I decide the maximum amount I am willing to lose on the trade. From this it is trivial to claculate the number of shares to buy - you can write a little program to do it. Then you cannot lose more than the set amount. Furthermore, you can then calculate your profit if the target is reached and decide if it is sufficient to justify the amount being risked in the trade.