Still trying to wrap my head around effective risk-per-trade on setups with highly asymmetric probabilities. If I have a setup with, say, a 10% chance of a huge payout, do you still stick to a strict 1% of capital, or does the potential skew allow for a slightly larger bet?
This is exactly what I'm grappling with too. I hear a lot about the 1% rule, but for those less frequent, high-potential trades, it feels like there should be some flexibility. Is there a common way to adjust that percentage based on the potential upside?
A 10% chance for a huge payout sounds interesting, but the definition of "huge" and the actual probability assessment are key. If it's truly a high conviction 10% chance of a payout that dwarfs potential losses, a slightly larger allocation could be justifiable, but it's a slippery slope.