I have spent the past two years researching swing trading, a method I consider to be the optimal balance between effort and gains. My journey began with Kristjan Qullamaggie, a legend in the trading world, who introduced me to one of his esteemed teachers, Pradeep Bonde. Within this influential group, I discovered Dr. Mansi, whose ability to simplify and articulate complex trading systems stands out as exceptionally clear and insightful.
I spent a lot of time looking at the details and ended up with over 70 pages of Dr. Mansi's explanations. I've simplified it since then. As a joke, I wrote it as a book and asked Dr. Mansi if I could put it online. So here it is:
Position Size
Position sizing holds the utmost significance in determining trading profits and losses, while progressive exposure complements this approach by adjusting position sizes based on trading performance. Sadly, many new traders overlook position sizing, unaware of its crucial role in account growth and risk management. The first trade should begin with a risk of 0.12% of the total equity, and as subsequent trades yield success, the risk percentage can increase. However, it's crucial to exercise caution by limiting risky positions to a maximum of two at any given time to mitigate potential losses. With progressive exposure, traders can maintain smaller drawdowns and steadily foster the growth of their trading accounts.
The two main rules for position sizing and progressive exposure are:
Starting with a new account, the first trade should risk 0.12% of the total equity.
If two trades are successful, the risk can be increased to 0.25%.
If two more trades are successful, the risk can increase to 0.5%.
If two more trades are successful, the risk can be set at 1%.
If two trades fail, the risk should be decreased step by step (0.5%, 0.25%, 0.12%).
Only take a maximum of two risky positions simultaneously to limit potential losses.
Ney’s comments: Historically, successful trades come in batches, and successful traders know when you bet heavy or retract; of course, we can't time the market. no one can. So we just keep taking trades constantly, but with progressive exposure, traders gradually increase their position sizes in good times as they gain more successful trades and decrease position sizes in bad times if they face consecutive losses. This approach aims to minimize drawdowns and steadily grow the trading account.
Ney’s note: When a stop is at or above breakeven, we say the trade is “Free” or “Safe.” You can have as many Free or safe positions as you want.
Notes: I have spent the past two years researching swing trading, a method I consider to be the optimal balance between effort and gains. My journey began with Kristjan Qullamaggie, a legend in the trading world, who introduced me to one of his esteemed teachers, Pradeep Bonde. Within this influential group, I discovered Dr. Mansi, whose ability to simpl…
