I always focus on better understanding the market condition because no matter how much you stick to risk management policy, if you fail to catch the market condition, everything other things will fall apart. Once you capture the market condition accurate, just set the lot size.
A Great trader should have Both, it's vital: An excellent strong strategical and tactical understanding approach and an equally sharp risk management plan that has no emotion about it. An enter strategy and close strategy That's the Only way to succeed in this game. Everything else will just crumble, turn to dust and fail There's absolutely no room for hope, prayer and luck in the market. Don't become another market statistic. But Great trading is definitely an adventure that requires spirit, wisdom, vision , determination and soul
The least you can do is to use ATR multiples and risk a fixed percentage. Let’s say you have 100,000 The ATR is 50pts, Value per points is 10$ Setup is 2risk & 1reward (P(win) ~ 2/3) Risk 2 ATR = 100pts = 1,000$ Fixed percentage is 5% (5,000) Buy 5/1 contracts
Market conditions are a coin flip as far as controlling, risk management only area you can control except for slippage.
I dont think it should affect your usual risk management system. If overall market conditions are bearish and you keep trying to go long it's like trying to pound a square peg into a round hole. Sure there are trades to be found here and there but they're harder to find and usually short-lived.
Indeed, I am a short time trader so it actually matters for me. But overall trend identification truly helps.
It works. A lot of professional use a fixed %risk and ATR for position sizing. Otherwise, instead of a fixed %risk, there is the kelly criterion but it’s more complex.
How you manage your position is more important than how you got into it. I’ve made some fantastic calls on when to buy and sell but then screwed myself out of the profit.