Risk Management 2

@headies25284 - 3 weeks ago - Risk Management

The textbooks usually emphasize keeping a constant risk per trade to avoid ruin.

However, when I look at what experienced traders actually do, I often see them varying their risk size based on the setup.

@headies25284 - 3 weeks ago

My question is: Is there a mathematical relation or formula for this?

The logic seems to be:

If I have a rare strategy that offers a high probability (e.g., 80% win rate), I should theoretically risk more on it. Conversely, if I have a very common strategy with a lower win rate, I should risk smaller.

But if the textbooks say "keep it constant," how do you guys actually proceed with this in the real world?

I would really appreciate any keywords or reading suggestions on this topic, as I don't want to break the rules of risk management, but I also want to maximize the potential of high-probability setups.

Thanks!