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

More from All

Master Thread of all my threads!

Hello!! 👋

• I have curated some of the best tweets from the best traders we know of.

• Making one master thread and will keep posting all my threads under this.

• Go through this for super learning/value totally free of cost! 😃

1. 7 FREE OPTION TRADING COURSES FOR


2. THE ABSOLUTE BEST 15 SCANNERS EXPERTS ARE USING

Got these scanners from the following accounts:

1. @Pathik_Trader
2. @sanjufunda
3. @sanstocktrader
4. @SouravSenguptaI
5. @Rishikesh_ADX


3. 12 TRADING SETUPS which experts are using.

These setups I found from the following 4 accounts:

1. @Pathik_Trader
2. @sourabhsiso19
3. @ITRADE191
4.


4. Curated tweets on HOW TO SELL STRADDLES.

Everything covered in this thread.
1. Management
2. How to initiate
3. When to exit straddles
4. Examples
5. Videos on

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The chorus of this song uses the shlokas taken from Sundarkand of Ramayana.

It is a series of Sanskrit shlokas recited by Jambavant to Hanuman to remind Him of his true potential.

1. धीवर प्रसार शौर्य भरा: The brave persevering one, your bravery is taking you forward.


2. उतसारा स्थिरा घम्भीरा: The one who is leaping higher and higher, who is firm and stable and seriously determined.

3. ुग्रामा असामा शौर्या भावा: He is strong, and without an equal in the ability/mentality to fight

4. रौद्रमा नवा भीतिर्मा: His anger will cause new fears in his foes.

5.विजिटरीपुरु धीरधारा, कलोथरा शिखरा कठोरा: This is a complex expression seen only in Indic language poetry. The poet is stating that Shivudu is experiencing the intensity of climbing a tough peak, and likening

it to the feeling in a hard battle, when you see your enemy defeated, and blood flowing like a rivulet. This is classical Veera rasa.

6.कुलकु थारथिलीथा गम्भीरा, जाया विराट वीरा: His rough body itself is like a sharp weapon (because he is determined to win). Hail this complete

hero of the world.

7.विलयगागनथाला भिकारा, गरज्जद्धरा गारा: The hero is destructive in the air/sky as well (because he can leap at an enemy from a great height). He can defeat the enemy (simply) with his fearsome roar of war.