Good link. Here is the link to the derivation of the formulas: http://www.priceactionlab.com/Blog/2011/01/why-trend-following-is-hard-a-quantitative-answer/
Mathematically, the only way to turn a relatively modest-sized bankroll into a huge bankroll is to have a positive expectancy system and exploit it for all it's worth, which certainly means risking more than 2-4% per trade. I've never seen minimizing drawdown as a valuable objective. Since drawdown is inevitable, the only constraint I put on it is that it not exceed 100%. The reason I approach it this way, though, is that I am completely confident that the "edge" I am using as the underlying rationale for each trade is completely rock-solid and enduring. There is definitely a correlation between that feeling and the willingness to risk more per trade.
You cannot talk about having an edge before you finally quit and take a look at your final P/L. Any intermediate gains may be just a deviation from the inevitable ruin. "Edge" means I made money and I pocketed it. If you are still trading, anything you have pocketed may return back to the market. So you cannot still claim you have an edge. If you have quit trading already and you made money, even if you made $1 in 20 years, I will admit you had an edge, even tiny. If you are still trading, you may have nothing.
The Ancient Greeks had a saying, "Call no man happy before his death" because even the happiest man could, on the last day of his life, experience a great tragedy. So, while I agree with you that philosophically speaking there can be no such thing as certainty, I can virtually guarantee that if I described my edge to you, you would say "Yeah, that probably won't ever stop working". The problem is, I can't describe it to you without running the risk that you start using it and competing against me for entries and exits at my prices. Anyway, my point to the OP was that if he didn't have that same "feeling" (although it's not really a "feeling" in my case, because it is based on a logical thought process about each component of the strategy and why it works) about his approach, he should continue to work on it until he did. Then, he would have more confidence in really exploiting it. Unless he's got a very high-frequency strategy with lots of trading opportunities, risking 0.5-4% per trade isn't going to get him very far. But, hey, to each his own and I know that I can't force someone to have the same level of risk-seeking or avoidance that I have because it's a very personal thing.
Interesting comments, but I would return to my earlier point: a system with a 1:1 payout ratio will have greater drawdowns than one with a >1:1 payout ratio. Therefore if your system's risk is managed appropriately for the 1:1 payout ratio, it cannot possibly be excessively risky for a >1:1 payout ratio. Thus you only need to judge appropriate size & risk for a 1:1 payout ratio system. Worst case is that you underestimate the profitability of your system, and thus your worst drawdowns are say 0.8 or 0.5 times your target maximum drawdown - hardly a disastrous outcome.
If your bankroll is so small that risking 4% per trade will not compound it fast enough, then you are undercapitalised. Even if you only take 4 trades a year, risking 4% on each, with 3:1 payoff and 75% win rate, that is a compound return of 35% per annum, enough to make you a world class trader and become seriously rich over the long-term. A 65%+ drawdown will absolutely crush your ability to recover, as you need to triple your money just to get back to even. Risking 5-10% or even more per trade will mean you inevitably run into a nasty drawdown of 40-50% or more. And this is assuming your edge stays intact - if your edge has gone, you will be down 75%+ before you realise that the edge has disappeared.
If the win rate is low abandone the strategy for the time being but keep an eye on it because when market conditions change it may be your biggest winner. Same for breaking even. Trade the high win rate and trade with roughly 5-10%, or whatever your comfort level is. I would trade more in stocks than I would in futures so it depends on the market you are trading.
Van Tharp talks about this in some of his courses.. (I believe this subject is why Ed Seykota could say you get what you want out of the markets) Mr. Tharp is passionate about this subject... it seems to be the core of his work. you might consider the idea of portfolio heat. Its a long story, but while not really paying for any of the courses, I did get to learn a few things from Mr. Tharp. In short, my take is that he might suggest you keep your risk (Rs) low with your base account but you size up with profits. There is obviously more to it than that if your performance cycles. And my info is a decade old. there is some general info here. http://www.iitm.com/tips/VanQA.htm#I
Theses rules of thumb need to be derived from some type of Kelly or Optimal F calculation(With additional margins of safety). Otherwise they are just bumper sticker advice without much reasoning behind it