Having grown my Zerodha account 5x in last 19 months since I started systematic intraday options trading, felt I am eligible enough to share my principles around below topics that helped me scale up.

A thread on my style of position sizing, compounding and handling drawdown 👇

My money management principles first:

1. Do not risk more than 1% capital per trade
2. Account for DD while sizing position
3. Do not reduce position size while on a losing streak
4. Increase position size during winning streak
5. Compound capital daily to scale up quick and big
Why cap rupee risk at 1% capital per trade?

- We can be wrong in any trade and got to cut losers short
- Intraday price action is random and can be irrational

Market can stay irrational longer than a trader can stay solvent

Risking <1% per trade⬆️odds of trader staying solvent
Why account for impending DD upfront while sizing position?

- because I do not want to reduce position size while on a losing streak, but I also want to increase position size while on winning streak

- because when DD happens I am not disappointed as I already factored that in
Why do I not want to reduce position size in a losing streak?

- Because if I do, I will need 25% gain to recover from 20% DD which is an uphill task

- If I factored in 20% DD upfront for sizing position, then I need only 20% gain (not 25%) to recover from 20% DD
Why do I increase position size on a winning streak?

- There will be phases when our strategy aligns well with price action regime in the market. Go full throttle then.

- When you get an over full of half volleys, you gotta make hay, hit'em outta da park and party hard baby🤟
Now, why compound capital daily?

- I factored in DD while sizing position
- I factored in taking probabilistic approach to trading by risking <1% per trade

Now what holds me back from reinvesting the profit ASAP in the business that generated it? Nothing!

So I compound daily
Example with 1% risk per trade, 16.7% max DD

Day 1:
-capital: 12L
-expected DD: 2L
-risk per trade: 10k

If day 1 was 1L profit:
Day 2:
-capital: 13L
-expected DD: 2.2L
-risk/trade: 10.8k

If day 1 was 1L loss:
Day 2:
-capital: 11L
-expected incremental DD: 1L
-risk/trade: 10k
If DD goes beyond historical max DD that I factored in, then by virtue of risking fixed % of capital per trade I reduce position size while on losing streak.

This makes sense to me logically as I would like to go on risking lesser per trade just in case the s/m lost its edge.
Following this methodology I have gone through 8.77% DD in 3 days and scaled back up to equity high without reducing size.

I risk max 4% per day, max 0.5% per trade and factor in 15% DD.

From risking 20k per day in Jul'20, have scaled up to more than 10x that in this style.
In this tweet thread I just shared stuff the way I do it.

This of course does not mean that it is flawless or the best way to size position, handle DD while scaling up.

The intent was just to provide food for thought to those on the lookout for it!

Hope it helped someone.
Seems growing "account" 5x got more focus than rest of the thread 😉

Guys,
1. I am not claiming 400% return in 19 months😂

2. My account growth on starting capital has 3 components:
- trading profit
- unrealized investment profit
- small inorganic growth from salary savings

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🌺श्री गरुड़ पुराण - संक्षिप्त वर्णन🌺

हिन्दु धर्म के 18 पुराणों में से एक गरुड़ पुराण का हिन्दु धर्म में बड़ा महत्व है। गरुड़ पुराण में मृत्यु के बाद सद्गती की व्याख्या मिलती है। इस पुराण के अधिष्ठातृ देव भगवान विष्णु हैं, इसलिए ये वैष्णव पुराण है।


गरुड़ पुराण के अनुसार हमारे कर्मों का फल हमें हमारे जीवन-काल में तो मिलता ही है परंतु मृत्यु के बाद भी अच्छे बुरे कार्यों का उनके अनुसार फल मिलता है। इस कारण इस पुराण में निहित ज्ञान को प्राप्त करने के लिए घर के किसी सदस्य की मृत्यु के बाद का समय निर्धारित किया गया है...

..ताकि उस समय हम जीवन-मरण से जुड़े सभी सत्य जान सकें और मृत्यु के कारण बिछडने वाले सदस्य का दुख कम हो सके।
गरुड़ पुराण में विष्णु की भक्ति व अवतारों का विस्तार से उसी प्रकार वर्णन मिलता है जिस प्रकार भगवत पुराण में।आरम्भ में मनु से सृष्टि की उत्पत्ति,ध्रुव चरित्र की कथा मिलती है।


तदुपरांत सुर्य व चंद्र ग्रहों के मंत्र, शिव-पार्वती मंत्र,इन्द्र सम्बंधित मंत्र,सरस्वती मंत्र और नौ शक्तियों के बारे में विस्तार से बताया गया है।
इस पुराण में उन्नीस हज़ार श्लोक बताए जाते हैं और इसे दो भागों में कहा जाता है।
प्रथम भाग में विष्णुभक्ति और पूजा विधियों का उल्लेख है।

मृत्यु के उपरांत गरुड़ पुराण के श्रवण का प्रावधान है ।
पुराण के द्वितीय भाग में 'प्रेतकल्प' का विस्तार से वर्णन और नरकों में जीव के पड़ने का वृत्तांत मिलता है। मरने के बाद मनुष्य की क्या गति होती है, उसका किस प्रकार की योनियों में जन्म होता है, प्रेत योनि से मुक्ति के उपाय...

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