Been following the market for a bit and trying to get more consistent with live trading. I'm struggling with adapting my risk sizing for trades that feel more 'certain' versus those with wider ranges of outcomes. How do you veterans handle varying your position size based on perceived trade quality or do you stick to a fixed percentage regardless?
Perceived certainty is a trap. Stick to a fixed percentage of your capital, or a fixed dollar amount, per trade. Your read on a trade is often biased; trying to adjust sizing based on that will just lead to bigger losses on the trades you were 'sure' about.
Welcome! That's a great question, and something most traders wrestle with. Personally, I don't vary my position size based on perceived certainty; I find it's a slippery slope to overbetting on hunches. Instead, I focus on a fixed percentage and let the market tell me when I'm wrong.
I generally stick to a fixed percentage to avoid overtrading or taking on too much risk based on emotion. What factors are you considering when you perceive a trade as more 'certain'?