Understanding Position Sizing Beyond 'Risk 1%'

It's easy to say "risk 1% per trade," but true position sizing is more nuanced than that blanket statement. It's about aligning your capital with your actual perceived edge and market conditions. For example, if I'm trading something like $CRV at $0.2282 and my stop is at $0.225, that's a relatively small capital allocation for a significant move, assuming good liquidity. Compare that to $US30, currently around 54036.93; even a 50-point stop can mean a much larger notional exposure and thus a larger 1% dollar risk, dictating fewer contracts. Acknowledging that not all '1% risks' are equal in terms of position size, or even in terms of the quality of the setup, is crucial. Sometimes, a high-conviction setup might warrant a 1.5% risk if the probabilities are exceptionally skewed, while a weaker setup might be a 0.5% risk, all while maintaining the same dollar-denominated risk-per-trade. It's about dynamic adjustment based on the situation, not just a static percentage.