Maximizing Your Trading Profits with Progressive Position Sizing

As traders, we're always looking for that edge to boost our performance and grow our accounts. One strategy that can maximize your gains is progressive position sizing pioneered by Mark Minervini. The core idea? Start with a reasonable initial risk, and then steadily increase your bets as the market cooperates with you.

Here's how I like to implement progressive position sizing:

Start at 8%

We'll begin by risking 8% of our account capital per trade. For a $25,000 account, that's $2,000 position sizes. Enough risk to make it meaningful, but not so large that a couple of losers could cripple your account.

The key here is developing confidence in your strategy and the current market conditions before ramping up leverage. Stick at 8% until you have a solid sample of 10+ profitable trades.

Step It Up to 10% 

Once you've got some winners under your belt, it's time to press your edge. Increase your position sizing to 10% of capital, or $2,500 for that $25,000 account. This allows you to capitalize more aggressively on the momentum you've built.

Monitor your performance at 10% over the next 10-15 trades. If you continue printing money, get ready for the next level.

The 12% Maximum

When the market is clearly in your favor and your strategy is clicking, you've earned the right to go for broke - within reason, of course. At this level, you'll be putting 12% of capital to work per trade, or $3,000 on that $25k account. 

12% allows you to swing for the fences on your highest conviction setups. But it's also the absolute maximum I'd recommend, even in the hottest conditions. Controlling risk is still paramount.

But What About Losses?

Losses are inevitable, even for the best traders. That's why position sizing discipline is so critical. I suggest using fixed percentage trailing stops, starting around 7-8% below entry. This limits damage if things go awry

More importantly, you need to be ready to quickly reverse course after a poor streak. If you experience 3-4 consecutive losers at any position sizing level, immediately drop back down to the previous, smaller sizing until you regain your edge.

Cutting risk allows you to survive rough patches without blowing up your account. You can always scale back up once you're consistently profitable again.

The Compounding Effect 

What's so powerful about this progressive approach is how it can compound your profits over time. Winning at 8% generates capital for bigger 10% positions. Nail those and you've got serious gunpowder for 12% maximum trades.

But it all starts with a reasonable initial risk that aligns with your skill level. From there, the market itself tells you when to level up your bets. Consistent winners keep leveling up, while temporary struggles mean paring back before trying again.

It's a self-regulating, rinse-and-repeat cycle for growing your account: Start small, then let winners finance bigger position sizes. Wash, rinse, repeat.

The path to trading mastery is long, but progressive position sizing can dramatically accelerate your capital compounding once you've got the fundamentals down. Start with 8%, be patient, and get ready to take calculated, progressive bets once the market starts paying you.

Works Cited:

 Minervini, Mark. Trade Like a Stock Market Wizard. McGraw-Hill Education, 2013.