MONEY MANAGEMENT

[binaryowner]

Capping risk at 1 percent makes sense, because it keeps you alive during bad weeks. I also like the idea to reduce risk after a losing streak, but do you use a fixed rule like cut size by half after X losses?

[bluemac]

No fixed rule, because market conditions change. If I’m in a 70% winrate strategy and lose 3 in a row, that’s statistical noise. I keep 1%. If I’m testing a new setup and lose 2 in a row, I’m already down to 0.25%. My only fixed rule: Never increase risk after a loss. Reduction is discretionary: If I feel tilt, if news week is messy, if I took a loss breaking my rules then I cut size regardless of count. Drawdown is emotional. Protect the trader, not just the account.