The Complete Money Management Plan

Your money management plan is your trading constitution, the rules you follow regardless of how you feel in the moment. When fear pushes you to sell everything or greed tempts you to go all in, this plan keeps you grounded.

The Winning Streak Trap

More traders blow up after winning streaks than losing streaks. Winners breed confidence, confidence breeds larger sizes, and one bad trade wipes out weeks of gains. Your plan must be equally strict during winning and losing periods.

Why Written Rules Matter

The Plan Template

Per-Trade Risk Rules

Position Sizing & Stops

Portfolio-Level Rules

Drawdown Circuit Breakers

Winning Streak Rules

Account Size Tiers

Professionals often use lower risk percentages despite more capital, because preserving a large account is the priority. 0.5% of $500,000 ($2,500) is already a meaningful dollar amount per trade.

When to Adjust Size

Size changes should be incremental. 1% to 1.25% is reasonable. 1% to 3% because you feel confident is reckless.

The Monthly Review

Sign Your Plan

Add to the bottom of your plan:

"I commit to following these rules on every trade. Short-term deviations feel justified in the moment but damage long-term results. These rules exist to protect my capital and my future."

Signed: _________________ Date: _____________

Key Takeaways

A written plan removes emotional decision-making during market stress
Drawdown circuit breakers progressively reduce risk as losses accumulate
Winning streak rules prevent overconfidence from inflating position sizes
Review and update monthly. Your plan should evolve with your trading

Try This

20 XP

Use the plan builder above (or a blank document) to create your complete money management plan. Fill in each section for your current account size and risk tolerance. Read it aloud. Does anything feel too aggressive or too conservative? Commit to following it for one month before making changes.

Disclaimer

This educational content is for informational purposes only and does not constitute financial advice. Past performance is not indicative of future results. Trading involves risk of loss. You should consult a qualified financial advisor before making investment decisions. Swingfolio is a trade journaling tool, not a financial advisory service.