My Exact System for Knowing When to Press and When to Step Back
The Framework I Use to Scale Risk and Protect Capital | Edition 66
This is what will propel you from a mediocre trader to a world-class one.
To the next market wizard.
It will grow your account exponentially.
And your drawdowns will barely be felt.
It is simple.
BUT not easy.
That is why today I am going to show you my tactic.
And not just mine, but also that of 3 other market wizards who have a very strong grasp of this concept.
Let’s start with the masters, those who have decades of experience in the market.
When to Get AGGRESSIVE (according to market wizards)
Mark Minervini
- Your last 4-5 trades are working (open profits/close profits)
- Follow-through day occurs and market turns up
- Setups are visible AND bearing results
- Market is in “easy dollar” environment with stocks above 50/150/200-day MAs
William O’Neil
- Major indices trading above rising 50-day and 50-week MAs
- Market in definite uptrend (CAN SLIM “M” criterion)
- Price/volume action on indices confirms strength
Qullamaggie
- $QQQ above 10 EMA and 20 EMA, MAs trending up
- Your trades are working (progressive exposure)
- Leading stocks breaking out with volume
When to Get DEFENSIVE (according to market wizards)
Mark Minervini
- win rate drops below 50%
- Market conditions are weak/volatile
- Your trades are not working (getting stopped out repeatedly)
- “Hard penny” environment where fakeouts are common
William O’Neil
- Indices below rising 50-day MA
- Market in correction/downtrend
- Most stocks follow general market pattern down
Qullamaggie
- You’re in a drawdown
- Breakouts failing, more false moves
Ok, that’s what they say. Here’s how I turned that into a concrete system.
How do I get aggressive or defensive
I have created my own system.
It looks like this.
And it all starts with my last 5 trades.
Did they perform well, or did I get stopped out on all of them?
Okay, let’s say I got stopped out.
Why did that happen?
Is it because the market environment is unfavorable for my strategy, or is it my execution, a psychological cause?
Then, after I identify the root cause, I apply corrective measures.
So just like the masters, it all starts with your PnL.
Your performance on your last trades is the best indicator.
How much risk do I take
I have 3 risk thresholds based on performance and market awareness.
To keep things practical and not just conceptual, below you have a small “Risk Management Cheat Sheet” that translates the aggressive / defensive idea directly into risk percentages per trade.
In short, we use two axes: account performance and market context combined with setup quality.
On the left side, “Performance Based”, risk per position varies depending on the state of the equity curve:
Between 0.70 – 1% per trade when the account is at all-time highs and the market environment is favorable. Here we are in controlled aggressive mode, letting recent profits finance the larger exposure.
0.5% is the “normal” size, when we are neither in euphoria nor in a significant drawdown.
0.25% is defensive mode, used when the account is roughly in a 10% drawdown or recent performance is weak; we automatically reduce position size by half.
0.125% is ultra-defensive mode: account in roughly a 20% drawdown and an unfavorable environment; positions become almost symbolic, the focus is exclusively on capital protection.
On the right side, “Market MA + Setup”, we adjust risk based on pattern quality and SPY’s position relative to its moving averages:
1% risk only for an A++ setup when SPY is above the 10 MA, meaning a top-tier pattern in a very bullish market.
0.5% for an A setup with SPY above the 20 MA, moderate aggression in a still positive context.
0.25% for a B setup with SPY above the 50 MA, we are trading, but with a clearly defensive approach.
0.125% for a B setup when SPY is below the 200 MA, a mediocre pattern in a weak market, exactly where we want to be almost fully in cash.
With these settings, it is guaranteed you will not blow up your account
AND
you will have enough time to experience multiple market cycles.
Multiple market cycle experience
Daca o sa reusesti sa treci printr-un drawdawn https://www.ft.wtf/p/how-to-survive-a-drawdown-trading si o sa treci prin mai multe cicluri.
If you manage to go through a drawdown and experience multiple cycles,
something almost magical will happen.
You will develop the ability to feel and understand when the environment is favorable and when it is not.
That will help you know when to press the accelerator and when to hit the brakes.
For example, in March it was so difficult that almost every trade I entered ended in a stop loss.
As a result, my win rate was only 22%.
However, in May, at the time of writing, my win rate is 46% and will likely go above 50% as I take more profits.
So what I want to say is, do not get discouraged if it does not work out from the beginning.
You need time in the market.
AND
This does not come easy.
It comes with losses, frustrations, and a lot of perseverance.
And this is exactly what separates a trader who just participates from one who starts compounding consistently.
knowing when to press the accelerator and when to lift your foot.
That is exactly what we build inside PRO, not just trade ideas, but the context, the execution, and the real-time adaptation to what the market is actually doing.
You will see exactly how I size, when I scale, and when I step aside.
If you want to see how I apply this system day by day, on real trades, and be part of a community
PRO is your next step.
And right now is the best time to take it.
The yearly plan is 49% off.
If you’ve been sitting on the fence, this is the moment.
See you inside.
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“One trade closer to freedom.”
Vladislav