You should consider both criteria because no investor is truly risk neutral and if you have suffered significant drawdown you have to reduce your risk of ruin.
Love it. It is one of the foundations of my trading method. Not all trades are created equal. On a really fantastic set-up I might raise my standard 0.5% to as much as 1%.
For me it is completely objective. Having done a lot of research I have fairly good predictors for various set-ups, which then get adjusted by many other factors such as price position to S/R levels, time of day etc etc. I end up with a percentage probability. The better the probability the larger the trade amount.
But it stays within my risk of ruin parameters.
If I have a subjective situation on a trade I will usually pass on it. Other traders claim great success using subjective or seat of the pants methods. Who am I to question them?
FUCK NO
I take the probability of each trade as it presents itself. The phase of the moon, the colour of my hooker's lipstick, and the size of that day's PnL, are irrelevant to the probabilities of that trade.
If you are tired, stop trading.
You want to get drunk, stop trading.
You have lost a lot and gone on tilt, stop trading.
At this moment I have been trading for 24 hours non-stop. The opportunities presented themselves over and over so I took them. Monday was a slow day. Tuesday it went crazy.
I have now hit my fatigue limit for an old man. I can tell I am still wired from the success, but I know from experience that is the most dangerous. Extremely fatigued, but feeling great, take my own advice and stop trading.
In tennis they keep statistics on "unforced errors" at this level of fatigue my risk of an unforced error is far too high.
I bet this post will read stupid after some sleep.
EDIT: I see a nice breakout just starting on the EURGBP on M15, someone go take this money, I'm too tired to do another
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LOOK AT THIS ... wake up for the dogs and see I gave out a 90 pip move ... hope someone grabbed it ... was an easy $7,500
back to bed
You called it for upside right? Not the collapse afterwards?
I had a buy at .8955 under the button for a quick run to .897 ish... but I didn't pull the trigger... after that it pretty much collapsed on GDP figures though...
Both, the upside move was just getting started at 2:30 a.m. EST with a pending UK GDP news release at 4:30 a.m. EST
I scalp the upside break, lots of people apparently expecting a poor GDP number. Could just see the price starting to froth and move up based on those predictions. With news upcoming I always scalp rather than look for the larger move.
Get out and sit on the sidelines for the news release.
GDP beats expectations. Price breaks the 3rd standard deviation to the down side. Jump on that train going down.
I was too exhausted to trade it and was in a coma.
Somewhat similar pattern happened today that I got a piece of EURGBP moving up in early morning hours (2:00 a.m.) get two scalps.
Step to the sidelines
Mr. Draghi makes his scheduled announcement, price plummets , ride the train down, add to the position and sell more at the 10:15 pullback, by 2:30 p.m. going sideways, well past my normal end of day so out with 40 pips.
when i'm deep in the money, i don't give it all back. They say don't trade your pnL but my account really took off when i started trading my PnL...I still load up for bear on a prime set up but i pull the plug quickly if it goes against me. Psych wise, not much worse than ending a day red when you were super green earlier. Thus, i stopped putting myself in that situation by lowering my position size and walking away when things seem to slow down. You have to have a finish line.
I make good money doing the following:
Put over 50% on a trade with stop below entry candle. Doesn't matter what the risk is.
I exit a day or 2 later (trading daily chart) wherever the period closes or am stopped out.
I trade with momentum and trend. Very aggressive but my analysis shows that I can't handle low risk. I end up sabotaging my position and exit early (or late) while trying to make a winning trade.
Trading high risk for short term seems to be low risk for me.
Put over 50% on a trade with stop below entry candle. Doesn't matter what the risk is.
I exit a day or 2 later (trading daily chart) wherever the period closes or am stopped out.
I trade with momentum and trend. Very aggressive but my analysis shows that I can't handle low risk. I end up sabotaging my position and exit early (or late) while trying to make a winning trade.
Trading high risk for short term seems to be low risk for me.
Doctor, doctor, it hurts when I do this.
Then stop doing it.
Keep doing what works for you until it doesn't.