Maintain Your Risk Unit During Drawdown
You are in a losing streak and your account equity has fallen below the level where a typical trade would risk your standard unit (e.g., 1% of account). The condition for action is: equity < threshold that defines a full risk unit.
The instinct to enlarge position size to “recover faster” is invalid because it raises the absolute dollar risk per trade, breaking the consistency of your risk process and exposing you to larger losses if the trend continues.
Decision: keep the predefined risk unit unchanged. Trade the same % of equity as before, even if that means a smaller dollar amount per trade while you are in drawdown.
Preserve the original risk unit during drawdown; avoid scaling up position size to chase recovery.
#TradingTurtle #PositionSizing #TradingPsychology
You are in a losing streak and your account equity has fallen below the level where a typical trade would risk your standard unit (e.g., 1% of account). The condition for action is: equity < threshold that defines a full risk unit.
The instinct to enlarge position size to “recover faster” is invalid because it raises the absolute dollar risk per trade, breaking the consistency of your risk process and exposing you to larger losses if the trend continues.
Decision: keep the predefined risk unit unchanged. Trade the same % of equity as before, even if that means a smaller dollar amount per trade while you are in drawdown.
Preserve the original risk unit during drawdown; avoid scaling up position size to chase recovery.
#TradingTurtle #PositionSizing #TradingPsychology