Question on position sizing for overnight swings in EUR/USD
Hey all,
I've been trying to get a handle on more structured position sizing, especially for trades I intend to hold overnight or for a couple of days. Specifically, with $EURUSD, I'm often setting my stop-loss based on an invalidation level (say, just below a recent swing low or above a swing high for shorts). My current approach is to then work backward from my 1% account risk per trade to figure out the exact lot size. It feels logical enough, but sometimes when the stop is wider, the lot size gets tiny, which then makes the profit target feel almost negligible for the effort.
Am I overthinking this, or is there a point where the risk/reward just isn't worth it with a larger stop, even if the setup seems valid? How do you experienced folks balance a 'valid' stop placement with a 'worthwhile' potential profit, especially on the majors where moves can be more constrained percentage-wise?
For EUR/USD, using a percentage of account risk is fine, but you need to factor in the specific pip value and your stop distance accurately. Are you adjusting your lot size based on your stop-loss distance in pips for each trade, or is it a more static approach?