Anyone else struggle with position sizing for higher conviction trades?
Hey everyone,
Been trading for a bit now, mostly focusing on $SPY and a few individual names. I'm finding that my position sizing is pretty consistent on my more 'standard' setups, where I'm just taking a small piece of the move. But then I get these trades I feel really good about, where the confluence of factors is just so strong – great chart, solid news, good sector tailwinds, etc. And that's where I seem to mess up. I either size up too much, get emotional, and get chopped out of what should have been a winner, or I size up a little, it works out, and then I'm kicking myself for not having more capital in it.
I've tried a fixed percentage of capital, but on those high conviction plays, it still feels off. Do any of you have a specific system or mental framework for adjusting position size when you genuinely feel a trade has a significantly higher probability of success than your average setup?
I definitely feel this. It's tough not to want to increase size when everything lines up perfectly. Do you find you're more prone to making errors on those higher conviction trades because of the increased pressure?