Money Management Strategies
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Thread: Money Management Strategies

  1. #1
    Strategies are used? I read about Pyramiding in Beau's book and I was wondering if anyone uses that egy. It sounds kind of risky? Pyraminding is trading on each trade with the identical percentage of your account. Beau's book suggests 10 percent of the account on each trade but that sounds kind of large.

  2. #2
    um. . .the Pyramiding I understand means when the economy moves in your favor adding contracts to your position.

    Some investors even pyramid in a loosing place, which is very risky.

    When you examine the results from last months FXCM King of the Mini winner, he had been utilizing Pyramiding in winning positions. I believe they left over 200% in a month...

  3. #3
    What would you consider windfall profits?

  4. #4
    Quote Originally Posted by ;
    I've researched money management plans extensively. I've reasoned their efficient use comes from a approach yielding a high win/loss ratio that has a string of losses and wins.

    Therefore, Money management could be best paired with the trigger that causes one to input coupled with a MAE and MFE analysis of that particular trigger.

    Entrance is your key....lack of immersion is the enemy

    A reasonable Predictability of your sign, can be used with a martingale kind money mangement. . .and in some systems a anti martingale stategy works best...

    I shall talk about and establish a what I call a reverse martingale method together with predictable sequences of losses and wins. . .someday when I feel for this. . .stay tuned...

    Michael B.
    Savant, I understand that you simply use martingale on your cash/carry plan and it works well.

    But with martingale in directional trading (were you earn or lose money because the market moves in a certain direction) is the fastest 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.

    The issue with martingale MM plans is that you will be wiped out from the first string of losers. And all systems. The traders assignment is to stay in the sport, the assignment is to create money.

  5. #5
    Mm is made out to be a good deal more complex than it needs to be. The simplest method of gambling X percent of your portfolio on each trade (aka percentR) is normally the best. You'll realize that even the biggest, most advanced traders still use %R.

  6. #6
    Well, to some extent I agree with Merlin which MM is being made complex than it should be. As straightforward as it gets, as better it will function, that is exactly what I think.

    There are always two types of trades, higher odds ones and low probability ones according to your egy. It's just straightforward to use 1 lot for low probability trades and two for higher probability ones given that the risk per transaction stays inside your acceptable range in both circumstances.

    Which makes it complex is not bad, the calculation itself might be complex, but the idea itself needs to stay simple. You can choose what I have just stated and create a complex execution or an easy execution, and most likely, they will end up almost the very same effects, so why bother.

    Thanks,

    Nader

  7. #7
    As ive said, I adhere to percentR for MM (risk a constant proportion of portfolio on every transaction). This really is a simple concept that works.

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

    For example...

    initial portfolio size = $100,000
    present portfolio size = $120,000
    present portfolio gain = $20,000
    %R = 1%
    percentP = 1%

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

    However with percentRP, you would be exceeding $1,200 one % of earnings (1% of 20,000 = $200). You would thus gamble $1,400 on every transaction.

    If your account has no gain in it, %RP will act exactly like %R. its only once you show a gain that you begin to risk a proportion of your earnings on each trade.

    This really is a good way to cultivate your accounts fast, and I normally find it simpler than optimalF egies that attempt to achieve the exact same feat.

  8. #8
    I would be alright if I had half of the money management skills you guys are discussing.

  9. #9
    Quote Originally Posted by ;
    When I had half of their money management skills you guys are discussing, I'd be alright.
    Just read http://www.amazon.com/exec/obidos/tg...=booksn=507846, its MM made easy. Youll get it. Once you learn the methods, you may realize you shouldnt have been trading without knowing them

  10. #10
    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

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