Enjoyed this interview with Stan Gluzman, who is a professional day trader. He revealed exactly how he determines the amount of money he risks day to day and how it changes over time:

“I'm tracking a lot of stuff with my P&L. The most important metric is average green day. I want a ‘bad day’ to equal one average green day. If I'm losing two or three average green days on a bad day, then my week is messed up, I'm not in the right mindset. But if it's one average green day, I don't give a hoot, I'll make it back tomorrow.

I'm tracking a 22-day moving average of my average green day, and I'm setting my daily lockout, my daily max loss, to that number. Let's say it's $1000, so I have $1,000 to risk for the day, I'll risk a third of it on a trade. I can take three trades and be wrong and that'll be my day, but that’s probably not going to happen.

The better I trade, the more the moving average moves up, then my 1R over time goes from $1,000 to $1,200 to $2,000 to ... $10,000, etc. That's how you earn the right to size up.”