🗓️ How to Build a Monthly Risk Budget Like a Professional Fund Manager

🗓️ How to Build a Monthly Risk Budget Like a Professional Fund Manager

🎯 The Lesson

Retail traders think in days.
Professionals think in months.
A monthly risk budget gives you structure, protects your capital, and removes emotional decisions.
It’s how funds stay consistent year after year — and how you should manage your account too.

⚙️ Step 1: Define Your Monthly Maximum Drawdown

This is the maximum loss you allow before stopping all trading for the month.
Funds keep this between 6% and 10%.

Example:

• Account: $10,000

• Max monthly drawdown: 8% → $800

Once you hit –$800, you stop for the month.
No exceptions.
This prevents one bad period from destroying long-term growth.

📊 Step 2: Break It Into Weekly Risk Limits

If your monthly limit = $800:

• Weekly limit = $800 ÷ 4 = $200 per week

This structure makes risk predictable and prevents large swings.

If you hit –$200 in a week → trading stops until next Monday.

🧮 Step 3: Connect Risk Budget to Position Sizing

If your weekly risk is $200 and you risk 2% per trade → $200 ÷ $200 = 1 loss allowed per week
or
Risk 1% per trade → $200 ÷ $100 = 2 losses allowed

This tells you how many errors you can survive — and keeps your risk realistic.

🔢 Step 4: Track Your Monthly Risk Usage

At the end of each week, note:

• Weekly P/L

• Drawdown

• Risk percentage used

• Trades taken

• Average R per trade

If you use more than 50% of your monthly risk by mid-month, reduce lot size automatically.
This is what risk desks do in real funds.

🧩 Step 5: Monthly Reset Routine

On the last day of the month:
1️⃣ Close open positions
2️⃣ Log final equity
3️⃣ Note total R gained or lost
4️⃣ Review mistakes vs. plan
5️⃣ Plan risk for next month

This keeps your trading organized — like a real business.

🚀 Takeaway

A monthly risk budget protects you from your worst days and your worst impulses.
It creates consistency, limits damage, and lets your edge work long-term.
If you want professional results, you need professional risk structure.

📢 Join my MQL5 channel for more trading & risk-management insights:
👉 https://www.mql5.com/en/channels/issam_kassas