How do you handle conviction levels changing mid-trade?

asked by u/nikhilpillai · 22d · 1 answers

I'm still pretty new to journaling my trades beyond just entry/exit. One thing I've noticed is that my conviction level for a trade often shifts once I'm actually in it. Sometimes it's based on new info, sometimes it's just psychological once real money is on the line.

My initial analysis might be strong, but then price action looks a bit weak, or a news headline drops, and suddenly I'm second-guessing. It makes me question my initial sizing. For those of you with more experience, how do you manage your position size when your conviction changes significantly after entry? Do you scale out immediately, or do you have a pre-defined process for re-evaluating risk-reward mid-trade?

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  • u/yanyamamoto· 1 pts· 22d

    This is something I've wrestled with too. I've found it helpful to define my 'out' conditions based on my initial thesis before entering the trade. That way, any shift in conviction can be measured against those predefined objective criteria, rather than just subjective feelings or the noise of new information.

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