Money Management Strategies - Page 2
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Thread: Money Management Strategies

  1. #11
    Quote Originally Posted by ;
    using martingale in directional trading (were you make or eliminate money because the market moves in a certain way) is the quickest way to SURE RUIN. You have to use anti-martingale in such cases, there's absolutely no way around it. Thats not my opinion, thats a fact proven by the world's best scientists.
    Not only that it's been proven even more conclusively with a huge series of the worlds biggest losers.

    FT

  2. #12
    Quote Originally Posted by ;
    mm is made to be much more complied than it has to be. The simplest method of gambling X percent of your portfolio on each transaction (aka percentR) is normally the best. You'll find that the largest, most sophistied institutional traders still use %R.
    Provided that you have the right kind of account for place size alloion to steer clear of asymetrical leverage issues it's all about the most robust money management through the broadest variety of systems and market conditions out there.

    Ft

  3. #13
    Quote Originally Posted by ;
    because ive said, I adhere to %R for MM (hazard a constant percentage of portfolio on each transaction). This really is a simple concept that works.

    I do have another MM plan that I like to utilize. Its called %RP. This really is where you bet a percent % of your portfolio on each transaction, PLUS a percentage of you profits.

    For example...

    initial portfolio size =100,000
    current portfolio size = $120,000
    current portfolio profit = $20,000
    %R = 1%
    %P = 1%

    with plain %R, you would be exceeding 1% on each transaction (1% of $100,000 = $1,200).

    But with %RP, you would be exceeding $1,200 1% of profits (1% of 20,000 = $200). You would risk $1,400 on each transaction.

    If your account doesn't have any profit in it, %RP will behave exactly like %R. its only once you show a profit that you begin to risk a percentage of your profits on each trade.

    This really is a superb way to cultivate your account quickly, and I normally find it better than optimalF approaches that try to accomplish the same feat.
    I made a spreadsheet around that exact kind of system that allowed placing a different hazard level for those equity and profits. I played round and experimented with quite a few scenarios. In the end I found it was easier just to increase more than (% r) position size as profits attained certain amounts and that equity curve was simplest to control and more tangible that manner. In the end it was a version on a ratio position sizing plan.

    FT

    FT

  4. #14
    i know, i know. Ya keep testing and testing, and you end up back where you began gt; percentR. when it has to do with MM, simple is exceptional.

    The only time I use the percentRP is in loion of an optimalf egy. And that is not.

  5. #15
    Quote Originally Posted by ;
    I also did a little work with a spreadsheet on the topic. Actually, I adapted it to the purpose , and took a replica of yours. 1 thing that I added, apart from the area to the additional danger% to be used on the earnings and therefore determining the additional contracts traded, was a pillar that calculated the NEW, total danger % of the trade.
    LOL. Among the spreadsheets had that feature that I'd disabled before submitting it since it was outside the topic that I was addressing.

    Quote Originally Posted by ;
    By consolidating the first risk % bucks, lets say 2 percent, and the danger % in bucks on the profits for use I was able to determine how much risk each trade was risking total, concerning the account equity, irregardless if it was first capital or earnings.
    After much research that is precisely why I'd concluded it was simpler just to adjust over all risk level as the account improved. Once I'd seen that mixing the danger of proft and original equity just escalated to a sliding scale of danger I determined it didn't much matter how you go about it that you just require a risk profile that reflects your own body and market doctrine.

    Quote Originally Posted by ;
    Once I extrapolated my existing returns out into time, I attain levels of total risk per trade that I am uncomfortable with. Once reaching levels of 7 percent risk per trade or higher the swings in the account can become too large for my liking. So I decided on a manual pre-determined cap. So that when the account does reach these levels instead of actually risking let us say 2% on first capital and 5 percent of earnings, if the overall risk per trade became higher then 4 or 5% per trade it would be capped.
    You've got a fairly large risk tolerance. Either that or you've got a fairly large win ratio.

    Quote Originally Posted by ;
    What I don't know is Asymetrical leverage. I've read in a few of your articles that the effects of Asym-Lev could be debilitating to a little account. I am under the understanding that an account with $25,000 or less can truly be negatively effected by this, and as the account equity gets greater it becomes less of a factor. However, I don't know why. I can't figure out it.
    With a %hazard MM system you can't control your risk really close to the constant level of danger that you want to achieve if your position size jumps in massive increments. Envision trading 100k place size using a 25k account. If you define your risk to a constant 2 percent you'll be able to danger 500.00 which means trading one contract using 50 pip ceases or two contracts with 25 pip stops. If your stops needs to be at 30 pips, what happens? Then you can just trade 1 contract that means danger of 1.2 percent with a single contract or 2.4 percent with two. Put simply your leverage is either too little or too big in that scenario but whenever your account reaches 30k you can exchange 2 contracts with 30 pip stops and also have just 2 percent risked.

    As soon as you jump from 1 contract to two your leverage doubles from when you're trading a single contract. So between 25k and 30k you're risking less than two percent. Really much closer to 1 per cent for a great part of the time. If your projected equity curve permits 2 percent danger you don't make quite as much cash if you're winning as you should since you aren't risking 2 percent. If you're losing you will lose much less by not risking much but in a positive anticipation system using a wonderful distribution of wins and losses you will not be maximizing your profits. Thus you lack a symetrical leverage and based on how your trades work this out can help or hurt you. My research proves that it is going to hurt you a good deal more often that it is going to help you. I've mostly found scenarios where a constant risk is much more rewarding than fluctuating risk.

    To resolve the issue of asymetrical leverage all you need is a smaller place size in relation to your account dimensions. With FOREX trading the very best results I've found indied that having the ability to initiate position dimensions in 1000.00 increments was greatest for accounts under 20k. Often these are called micro mini. After 20k or so graduating to a mini or 10k increments in exchange size... etc. I have not used it FXCM includes a module that permits sizing trades to an exact percentage and will correspondingly produce a position size to an exact dollar amount that reflects the exact percentage. I think there's a minimum account size needed.

    Quote Originally Posted by ;
    What exactly is Asymetrical leverage?

    What causes it?

    Why does it hurt a smaller account and not a larger one?
    If your minimum position size is too big concerning your account dimensions the exact same thing will also occur to a larger account. A great example is back when SP contracts required 15 to 20% of margin and there were no mini contracts. A person trading these contracts and a %R MM approach would experience a great deal of asymetrical leverage with 500k and see its effect with accounts to the low millions.

    Quote Originally Posted by ;
    What lively exists between account dimensions, position sizing and Asym-Lev, and what can the dealer do to reevaluate it's effects? Perhaps using super duper miniature's like with Oanda or FxSol such as until the account equity reaches out of it's reach?
    Right.

    Quote Originally Posted by ;
    Who's that masked man?
    Huh?

    FT

  6. #16
    PERFECT.

    Thank very much for your answer.

  7. #17
    Fiji you edited my own post! Its easy to become confused between the edit and quote button

  8. #18
    Quote Originally Posted by ;
    i know, i know. Ya keep testing and testing, and you end up right back where you started gt; %R. when it has to do with MM, simple is exceptional.

    The only time I use the %RP is set up of an optimalf egy. And that's not at all.
    LOL. You are. Probably you use %RP (if you dust off it) since it gives you a different way to check at risk than because it is any better even in these rare cases. If you do use it most likely it is more testing and when experimentation than for your PF trading?

    Personally I tried it out as somebody (I think it was Van Tharpe or Willi) mentioned it in their advertising literature like it had been a novel idea, and so I mimicked it to see what it had been about. In the end of the afternoon it is an eye ching marketing thought to market a novel spin on money management. It is enlightening to play.

    FT

    Sorry Merlin trouble fixed.

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