Money Management Module – Dynamic Position Sizing for Crypto Trading

Overview

The Money Management Module is an advanced risk management system that automatically adjusts your position sizes based on trading performance. Instead of using fixed order sizes, the bot dynamically scales positions using proven mathematical sequences to optimize capital growth during winning streaks and protect capital during losing streaks.

Core Concept

Traditional trading uses fixed position sizes (e.g., always trading 0.1 BTC). The Money Management Module uses progressive sizing sequences that adjust order size based on:

• Win/Loss outcomes of previous trades
• Pre-configured mathematical sequences (Fibonacci, Martingale, etc.)
• Your base position size as the starting point

How It Works

1. Start with base size: First trade uses your configured base order size
2. Track outcome: Bot records if trade was profitable or loss
3. Apply sequence: Next trade size = Base Size × Sequence Multiplier
4. Reset logic: Sequence resets after win (Mode 0) or continues based on strategy

Configuration Parameters

Basic Setup

MoneyManagementStrategySettings:
  Sequence: [1, 1, 2, 3, 5, 8, 13, 21, 34, 55]  # Fibonacci example
  Mode: 0  # Reset behavior (0 = reset on win)

Parameters Explained

Pre-Built Sequences

1. Fibonacci Sequence (Conservative Growth)

Best for: Balanced risk/reward, trending markets

Sequence: [1, 1, 2, 3, 5, 8, 13, 21, 34, 55]
Mode: 0

Characteristics:

• Gradual position size increase
• Natural growth pattern
• Lower drawdown risk
• Suitable for medium-term strategies

Example (Base size: 0.1 BTC):

• Trade 1: 0.1 BTC (1×)
• Trade 2 (after loss): 0.1 BTC (1×)
• Trade 3 (after loss): 0.2 BTC (2×)
• Trade 4 (after loss): 0.3 BTC (3×)
• Trade 5 (WIN): 0.5 BTC (5×) → Resets to 0.1 BTC

2. Martingale Sequence (Aggressive Recovery)

Best for: Mean reversion strategies, high win-rate systems

Sequence: [1, 2, 4, 8, 16, 32, 64, 128, 256]
Mode: 0

Characteristics:

• Exponential position doubling
• Fast recovery from losses
• HIGH RISK - Can cause rapid account depletion
• Requires substantial capital reserves

Example (Base size: 0.01 BTC):

• Trade 1: 0.01 BTC (1×)
• Trade 2 (after loss): 0.02 BTC (2×)
• Trade 3 (after loss): 0.04 BTC (4×)
• Trade 4 (after loss): 0.08 BTC (8×)
• Trade 5 (WIN): 0.16 BTC (16×) → Resets to 0.01 BTC

⚠️ Warning: One win recovers all losses, but 8+ consecutive losses can deplete entire account.

3. ThreeSixNine Sequence (Linear Progression)

Best for: Stable markets, gradual scaling

Sequence: [3, 6, 9, 12, 15, 18, 21, 24, 27]
Mode: 0

Characteristics:

• Linear position growth
• Predictable risk scaling
• Moderate drawdown potential
• Good for consistent profit targets

Mode Settings Explained

Mode 0: Reset on Win (Default)

Mode: 0

Most common strategy - Sequence progresses on losses, resets after first win.

Mode 1: Reset on Loss

Mode: 1

Sequence progresses on wins, resets after first loss. Use Case: Pyramiding strategies.

Mode 2: Continuous Cycle

Mode: 2

Sequence never resets, loops continuously regardless of outcome. Use Case: Fixed rotation strategies.

Custom Sequence Design

Guidelines:

1. Start with 1: First multiplier should typically be 1 (base size)
2. Growth rate: Control aggression with multiplier gaps
3. Length: Longer sequences = more loss tolerance
4. Max multiplier: Never exceed what your account can handle

Conservative Custom Example

Sequence: [1, 1, 1, 2, 2, 3, 4, 5]  # Triple base attempt, then grow

Aggressive Custom Example

Sequence: [1, 3, 9, 27, 81]  # 3x geometric growth

D'Alembert-Style Example

Sequence: [1, 2, 3, 4, 5, 6, 7, 8, 9, 10]  # Simple +1 progression

Risk Management Guidelines

Capital Requirements

Calculate maximum drawdown before enabling:

Formula: Max Drawdown = Base Size × Sum of Sequence

Example (Fibonacci [1,1,2,3,5,8,13]):

• Base Size: 0.1 BTC
• Sequence Sum: 33
• Max Drawdown: 3.3 BTC

Rule: Have 3-5x max drawdown in available capital

Safety Limits

Practical Examples

Scenario 1: Scalping with Fibonacci

Sequence: [1, 1, 2, 3, 5]  # Shortened for scalping
Mode: 0
BaseOrderSize: 0.05 BTC

Trade Sequence:

1. Loss at 0.05 BTC (-$200)
2. Loss at 0.05 BTC (-$200)
3. Loss at 0.10 BTC (-$400)
4. Loss at 0.15 BTC (-$600)
5. Win at 0.25 BTC (+$1,000)

Scenario 2: Swing Trading with Martingale

Sequence: [1, 2, 4, 8]  # Conservative Martingale
Mode: 0
BaseOrderSize: 0.02 BTC

Trade Sequence:

1. Loss at 0.02 BTC (-$100)
2. Loss at 0.04 BTC (-$200)
3. Win at 0.08 BTC (+$400)

Advanced Strategies

1. Hybrid Sequence (Anti-Martingale + Recovery)

# Win streak scaling, loss recovery
Sequence: [1, 2, 3, 5, 3, 2, 1]
Mode: 1  # Reset on loss

2. Volatility-Adjusted Sequence

# Larger gaps for volatile markets
Sequence: [1, 1, 3, 5, 10, 20]
Mode: 0

3. Stepped Recovery

# Plateau approach
Sequence: [1, 1, 1, 2, 2, 2, 3, 3, 3]
Mode: 0

Common Mistakes to Avoid

❌ Mistake 1: Insufficient Capital

Using Martingale [1,2,4,8,16,32,64] with only 5× max drawdown capital

Solution: Start with shorter sequences or more capital

❌ Mistake 2: Wrong Mode Selection

Using Mode 0 (reset on win) with a pyramiding strategy

Solution: Match mode to strategy intent (Mode 1 for pyramiding)

❌ Mistake 3: No Sequence Limits

Using sequences that exceed exchange position limits

Solution: Check max position size: Base × Max Multiplier < Exchange Limit

❌ Mistake 4: Ignoring Drawdowns

Not calculating worst-case scenario (all losses)

Solution: Always test: Sum(Sequence) × BaseSize × Avg Loss

Monitoring and Optimization

Key Metrics to Track

1. Sequence Position Distribution: Where do resets usually occur?
2. Average Recovery Trades: How many trades to recover losses?
3. Max Sequence Reached: Ever hit the final multiplier?
4. Win Rate by Position: Performance at each sequence level

When to Adjust

• Frequent max position hits: Shorten sequence or reduce base size
• Too many resets at position 2-3: Lengthen sequence for more recovery room
• Consistent wins at position 1: Consider starting at higher multiplier

Disabling the Module

MoneyManagementStrategySettings:
  Sequence: []  # Empty array disables module
  Mode: 0

Bot will use standard fixed position sizing from your main strategy settings.

Final Recommendations

For Beginners

Sequence: [1, 1, 2, 3, 5]  # Short Fibonacci
Mode: 0

Start conservative with capital for 10× max drawdown.

For Intermediate Traders

Sequence: [1, 1, 2, 3, 5, 8, 13]  # Full Fibonacci
Mode: 0

Requires proven strategy with 55%+ win rate.

For Advanced Traders

Design custom sequences based on:

• Backtested win/loss streaks
• Account size and risk tolerance
• Market volatility characteristics
• Strategy-specific recovery curves