Why 0.15-0.25% Per Trade and Avoiding Larger Drawdowns？
I come down to this % equity per trade because I am very data conscious of my own historical trades and behavior;
1) I have a historical average win rate of less than 34.5% across both stock and ETF ideas.
2) I am susceptible to a monthly consecutive losing streak of 11 to 15 trades in a period as short as 3 days, even on a profitable month. The numbers doesn't lie about my behavior and risk approach. I generally tend to expose myself aggressively when i) EW indexes are setting up and attempt breakout near the confluence of 10,20 & 50-MA with MMTW above 40%, 2) there are clear number of sectoral & industry group strength and stocks setting up above all MAs.
This is a number that I have already improved YoY via reducing the maximum daily new trade execution over time. I am not afraid of a 13 trade losing streak because it is normal, but it is a signal that i am reaching my upper limit of historical losing streak data.
3) I only execute trades if i could design my entry on them 60% ATR below LoD at that time of execution. My position size % of such a trade usually will be at 8-12% of account size based on 0.15% risk. Imagine when I see a GLD setup at only 30% ATR below LoD, that trade design can require 35% of account size. This is all based on just merely 0.15% risk to equity calculation. if it's 0.5%, it will require my full account funding (without existing trades) to take this $SPDR Gold Shares(GLD)$ opportunity. I will be locked up in 1 trade.
We are the kind of traders that affirm the risk % first, then it get to the position size. There are also others that get to the position size % of account first, then design the risk. I prefer the former
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