Struggling with position sizing and conviction levels
Hey everyone, been lurking here for a bit and decided to jump in. I've been trading for about a year, mostly forex like $EURUSD and some indices. My issue isn't so much finding setups, but really linking my conviction level to my actual position size. I understand the basic math – risk X% per trade, calculate size based on stop loss, etc. But sometimes I see a really high-probability setup, everything aligns, and I still find myself sizing it like any other trade, almost out of a fear of being wrong despite the confluence. Conversely, I sometimes find myself over-sizing a marginal trade just because I want it to work.
How do more experienced traders here actually scale their positions based on their conviction? Is it a more nuanced percentage, or do you have a set range of position sizes you rotate through based on a predefined checklist of conditions? Any practical advice on bridging that gap between analysis and actual execution with appropriate sizing would be super helpful.
It sounds like you're wrestling with the psychological aspect of risk management. "High-probability" can be subjective; perhaps re-evaluating your entry criteria for those setups would be more productive than adjusting sizing based on a feeling.