Adrian Reid explains how to add modest, recurring capital (e.g., $500–$1,000/month) to a trading account by distributing deposits across existing strategy allocations. He recommends maintaining a predefined capital allocation among systems so that incremental deposits automatically increase each system's available capital and proportionally enlarge subsequent position sizes; this approach is recommended when you do not wish to add new systems.
Chapters
The question of how do I add and allocate new capital gradually? If I'm adding 500 bucks a month or a thousand bucks a month, how might you deal with that from a capital allocation perspective? The first thing is we're assuming that you've got a capital allocation, as in a certain percentage to each of however many systems you're trading. If you don't have that, that's a very high priority. Now, if you save a little bit of money and you then distribute that between each of your strategies, the capital allocated to the first strategy gets a little bit bigger, right?
Then if you don't change any of your allocation, you don't add a new system or anything, you've just got a little more capital to trade that system with and every other system.
Then when you do your position sizing for your next trade, what happens? It gets a little bit bigger.
So if you're saving a relatively modest amount into your account, you can just drop it in at the top. It automatically flows through your capital allocation calculations. And when you get a new signal, it just sizes up the next trade just a little bit in proportion to your savings. So that's a really great approach when you're adding a small amount of money or you're happy with the allocation of systems that you've got and you don't want to add a new system.
