I've been working on my risk management, aiming for consistent 1% risk per trade. However, after a particularly bad week where I hit my max weekly drawdown, I find myself hesitant to even take 0.5% risk on new setups. Do others scale down their position size even further after a significant drawdown, or is it better to just stick to the predetermined risk-per-trade and focus on regaining conviction?
That's a really interesting question. I've had similar experiences after a bad trading period. Do you find that scaling down helps you regain confidence, or does it make you feel like you're not fully committing to your strategy?
A drawdown period is precisely when you should be strict with your established risk parameters, not improvising with smaller sizes. Sticking to the plan, even through the uncomfortable periods, is what consistency looks like. If you're hesitant, perhaps the issue isn't the size, but the conviction in your setup quality or overall strategy.
It's always a fun game, isn't it? The market takes your lunch money, and then your brain decides that even a cracker is too risky to hold onto. Sometimes a slightly smaller bite helps digestion, but don't let it become an excuse to starve yourself out of good setups.