This saves you from blowups or large drawdowns: Progressive Exposure
How to time the market | Edition 58
I get this question a lot.
Do you use leverage or not?
The answer is a bit more complicated, so I decided to write an entire article about why leverage is not the most efficient way to grow a small account.
This helps to grow your account in a way that avoids large drawdowns or even full blowups.
That is how the account grew 895% in 2024 and 203% in 2025.
You only need a few strong months and 3–4 stocks that hit big, sometimes just a single good month, to achieve outstanding performance by following this system.
I use something called:
Progressive Exposure and How It Helps You
It helps you to:
manage downsides
to bet big or not
tells you when to sit in cash and
when to follow the trend
Think of your exposure like an accelerator.
You do not jump from 0 to 200.
You press progressively, in steps.
Instead of starting a new market cycle with full positions, you do this:
start with pilot positions, small test positions
if the trades work, move to half positions and add more names
if both you and the market continue to perform, you upgrade to full positions
only in exceptional conditions, when you are in top form and the market is performing in the same direction, does it make sense to move to overweight.
It is a ladder, and you only climb each step if the last one held.
If you could see how this looks on a chart, it would look like this.
This is SPY (which is usually referred to as “the general market,” although that is not entirely accurate, it only represents S&P 500 equities).
Why am I showing you the SPY chart? Because statistics tell us that 3 out of 4 stocks follow the general market.
And when you trade, you want to be aligned with the general market.
Use the 10, 20, 50, and 200 MA as your guide.
When SPY is below the 200 MA, that is not the time to push.
How to apply progressive exposure
Let us put everything into a concrete scenario, very close to what often shows up in your accounts.
Scenario 1: coming out of a correction
You come out of a corrective period, you have been lightly exposed or in cash, the index starts to recover and closes a few days above the 20 MA, and you see a few leaders beginning to build bases.
Game plan:
Day 1–3: pilot mode
pick 1–2 highly liquid stocks with a clean setup
enter with 2–3% of your capital in each
clear, tight stop.
After 3–5 days
if the pilot positions work in your favor, stay above your entry, and print higher highs and higher lows
and the index confirms, without instantly rejecting the new trend
now you can add another 1–2 trades.
After 5–10 trades
if you have a group of winners, with 2–3R on a few names and small losses
from here, you start to size up the new entries
you can even top up existing leaders using open profit, not fresh capital.
If instead the first 3–5 trades are whipsaws and stopouts, you have no reason to size up, and no reason to start overtrading; cut and reassess.
The market is clearly telling you it is not a favorable environment.
Scenario 2: Everything is working, you are on a hot streak
You have 10–15 trades behind you, your equity curve is climbing nicely, drawdowns are minimal, and you finally feel like you are seeing the market clearly.
How to use that without blowing yourself up:
at the beginning of this run, you were at 10–20% exposure
as the winning trades stacked up, you increased to 40–80%
now, with consistent profit, in the very best windows, you can temporarily push to 80–100%
you do this with positions built gradually, not all at once
and with a clear plan to scale down as soon as you see the first signs that the environment is deteriorating or that you are starting to make mistakes.
Once you take 2–3 losses in a row, cut exposure. When the market gets heavy, you do not get back at it with more leverage.
However, if you are in a massive bull market, everything is running, and all your positions are in profit according to your strategy, that is the time to press.
How progressive exposure helps you “time the market”
The biggest benefit of progressive exposure is that it naturally takes you out of positions and moves you into cash.
You do not have to sit there wondering, “hmm, is this the right moment to go to cash or to push harder,” the system does that for you through your position sizing and win or loss streaks.
Let the market decide how much capital or leverage you should use.
Most traders do not lose money because they lack an edge, they lose because they are largest exactly when they perform the worst and smallest when the market finally offers real opportunity.
To know whether you should apply corrective action, track two things:
how the market is behaving right now
how you have behaved in your last few trades
Your portfolio is your best indicator, listen to it.
It is no longer “I feel like a bull market is coming, I am going all in,” it becomes “I have consistent gains, the market is confirming, I am increasing my exposure.”
What are your last 5–10 trades telling you?
Ask yourself honestly, without ego:
are you making money?
are you earning at least 2R on average on your good trades?
are your losses staying at 1R or less?
is there follow‑through, or are you getting cut right after entry?
If the answer is:
4–6 winners out of 10, with multiple R’s on the winners and controlled losses → you can move one step up the ladder
a string of consecutive stopouts, breakouts that fail, lots of noise → cut exposure, go back to pilot mode or even step aside
Do not go bigger to “make it back.”
Go bigger to capitalize when you are already doing well.
What is the market environment telling you?
At the index and leader level, look for:
signs of a healthy environment
the index is recovering and holding key moving averages like the 20MA, 50MA, 200MA
leaders are breaking out of clean bases on volume
there is follow‑through for several days, not just one green day that gets sold off immediately
signs of a toxic environment
wide and loose action, lots of whipsaw
breakouts are sold into right away
leaders are breaking support or reacting very poorly to earnings
You combine your personal feedback with the market’s feedback. Both need to say “GO” before you size up.
I have shared with the Pro community in more detail everything you need to do and my strategy.
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Vladislav