I've posted this before, but I've come to the determination that looser is better than tighter for trailer axles with drum brakes.
You don't get any feel with just the hub, so mount the wheel. This is critical because it gives you a much larger lever to feel a THUNK-THUNK. Physics dictate that perceived movement grows as you move away from the center of the hub, and the much greater diameter of the tire is an incredible tool here for our human brains to feel movement.
After seating the bearings with a tight spindle nut and spinning, back the nut off and then run it down with just your fingers (and a socket for reach, if necessary). Find that balancing point of a small THUNK-THUNK and no THUNK-THUNK when shaking at 12 and 6. The steps in the castle nut will dictate a THUNK/NO THUNK choice. I always opt for a tiny THUNK over having to use any kind of leverage to catch the next castle step.
With this approach my hubs are always cool (or mildly warm) to the touch when towing. Going tighter makes them too hot to touch for more than a split second. YMMV