How confident am I in the trade?

• I have a personal scoring metric for how confident I am in a trade. I score trades from a range of 1 to 5. 1 being the trade is low probability, and 5 being the trade is the highest probability with everything lining up. Most of the trades I take are in the 3-5 range; I do not engage in trades with a score of 1 or 2.
• I have a personal risk % range I use, and depending on the score I give the trade idea, I will adjust my risk to the upper or lower range of the risk % range accordingly. The trade ideas that have a score of 5, I will risk the upper range, and the trade ideas that have a score of 3, I will risk the lower range. Trade ideas with a score of 4, I will risk "normally.”
• Everyone has a different "normal,” and everyone has a different range, so I advise that you find what fits your trading style the best and then stick to it.

How far away am I from base balance?

• This one is a little more intricate. At smaller balances, it is much easier to re-deposit and compound the capital again because the percentage loss (if the risk is managed appropriately) should not make up a huge sum of capital.
• When you are handling larger accounts, this is where the above considerations will come into play. If you are in drawdown, you would want to risk less than your normal risk until you climb back to base balance. If you are in profit and want to earn more, feel free to increase your risk to a % that you are comfortable with.

How has my trading performance been?

• This is really important. If you have been winning continuously, great, but don’t be too ambitious. A good guideline I like to give myself is 5 wins, reset the risk back to default. If I’m on a roll, I will feel it, but I don’t want the markets to take all those wins away.
• If I’m on a losing streak, I will naturally bump down my risk. I am clearly not in sync with the markets after losing many trades in a row. I should reduce my risk to the lower end, despite the quality of the trade.