Money Management Techniques | Professional Trading Guide

Money Management Techniques

Professional Capital Growth & Preservation Strategies

Core Money Management Principles

Fixed Percentage Risk

Risk per Trade = Account × Risk%
Standard: 1-2% per trade

Never exceed maximum risk
Adjust for market conditions
Account for correlations
Scale based on performance

Position Sizing Models

Model	Application
Fixed Lot	Beginner stage
Fixed Risk	Intermediate
Volatility Adjusted	Advanced

Growth Targets

Monthly: 3-5%
Quarterly: 10-15%
Annual: 25-40%
Compound returns

Capital Preservation Techniques

Drawdown Management

Level	Action Required
5%	Review strategy
10%	Reduce position size 50%
15%	Stop trading, reset

Risk Controls

Maximum daily loss: 4%
Maximum weekly loss: 8%
Maximum monthly loss: 16%
Position correlation limits

Recovery Protocol

Reduce size by 50%
Focus on high probability setups
Increase win rate requirement
Weekly performance review

Account Growth Strategies

Compounding Methods

Base: Initial × (1 + Return)^Periods
Realistic: 2-3% monthly compound

Reinvest 50% of profits
Maintain cash reserve
Scale position size quarterly

Position Scaling

Account Growth	Size Increase
25%	0.1 lot
50%	0.2 lot
100%	0.5 lot

Performance Targets

Win rate: >55%
Risk/Reward: >1:2
Profit factor: >1.5
Maximum drawdown: <15%

Advanced Money Management

Portfolio Heat Management

Maximum open risk: 6%
Correlation adjustments
Session-based limits
Market condition scaling

Risk-Adjusted Returns

Sharpe Ratio target: >1.5
Sortino Ratio target: >2.0
Maximum drawdown cap
Volatility normalization

Position Management

Partial profit taking
Break-even stops
Trailing stop methods
Scale-out strategies