Is there anyone willing to share their Money Management strategy?
Jun 30, 2010 at 20:14
Hi Traders,
As we all know, there are 3 important ingredient in forex trading, there are:
1- System
2- Money Management
3- Psychology
Every forums and every websites I go people always emphasis on Trading System. Not many of them are talking about their Money Management. Is there anyone here willing to share their Money Management rules?
As we all know, there are 3 important ingredient in forex trading, there are:
1- System
2- Money Management
3- Psychology
Every forums and every websites I go people always emphasis on Trading System. Not many of them are talking about their Money Management. Is there anyone here willing to share their Money Management rules?
Medlem sedan Oct 28, 2009
1430 inlägg
Jun 30, 2010 at 20:24
I stake a certain percentage of capital per trade ( based on the pip value and the stop loss I am using ).
I generally set this between 1% and 5% depending on the strategy. I generally look at the figures using Kelly Criterion to decide the actual percentage. The higher Kelly is the more I will lean towards 5%, the lower the nearer to 1%.
I also take into account the number of trades per day. The more possible losses I might suffer in a day the more I will scale closer to 1%. It's not nice to come out of a day 25% down.
I generally set this between 1% and 5% depending on the strategy. I generally look at the figures using Kelly Criterion to decide the actual percentage. The higher Kelly is the more I will lean towards 5%, the lower the nearer to 1%.
I also take into account the number of trades per day. The more possible losses I might suffer in a day the more I will scale closer to 1%. It's not nice to come out of a day 25% down.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
forex_trader_7
Medlem sedan Aug 01, 2009
941 inlägg
Jul 01, 2010 at 02:37
(redigerad Jul 01, 2010 at 02:37)
Read this. It's an excellent example of MM.
https://www.winnersedgetrading.com/nytime-money-management/
'This may sound a little complex but it’s really quite logical. If the strategy starts losing, then it tends to lose several in a row. If this starts happening, we back off quickly, by reducing risk by 1% for each loss. If we’re back into winning trades, we gradually increase our risk level up to 4%, which is still reasonably conservative considering we only get to that if we have 4 or more winning trades in a row.'
https://www.winnersedgetrading.com/nytime-money-management/
'This may sound a little complex but it’s really quite logical. If the strategy starts losing, then it tends to lose several in a row. If this starts happening, we back off quickly, by reducing risk by 1% for each loss. If we’re back into winning trades, we gradually increase our risk level up to 4%, which is still reasonably conservative considering we only get to that if we have 4 or more winning trades in a row.'
Medlem sedan Oct 28, 2009
1430 inlägg
Jul 01, 2010 at 06:18
Interesting, good post Elkart.
I know that with Cast Iron Man the profit seems to go in cycles and this approach would definitely have paid off.
I know that with Cast Iron Man the profit seems to go in cycles and this approach would definitely have paid off.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
forex_trader_7
Medlem sedan Aug 01, 2009
941 inlägg
Jul 01, 2010 at 07:38
I lot of people fail to pay attention to the role of streaks in fx. I'm sure if you look at the back tests you'll see some monster loser streaks there.
This approach does take care of it, but I'd advocate trading really small lots like 0.01 instead of nothing. Nothing is a bit difficult to code!!
This approach does take care of it, but I'd advocate trading really small lots like 0.01 instead of nothing. Nothing is a bit difficult to code!!
Medlem sedan Jun 23, 2010
303 inlägg
Jul 01, 2010 at 16:30
Hi 4REX Genie,
Both Steve and Elkart brought up good points. My take on MM is about 1) your target return per year 2) the maximum drawdown of your trading system in pips.
If you are planning to obtain 1000% a year, then you are setting yourself up for failure. One of my forex students brought his account from $2k to $20K within one month. I told him at the time that he was setting himself up for failure. He lost all his money within 3 days afterward.
Another friend that I know, brought his 4x account from $20K to $250K after 1 year of trading. He then lost all his money within 3 months because the market condition has changed. You must know the drawdown of your trading system over a min period of 10 years.
Both Steve and Elkart brought up good points. My take on MM is about 1) your target return per year 2) the maximum drawdown of your trading system in pips.
If you are planning to obtain 1000% a year, then you are setting yourself up for failure. One of my forex students brought his account from $2k to $20K within one month. I told him at the time that he was setting himself up for failure. He lost all his money within 3 days afterward.
Another friend that I know, brought his 4x account from $20K to $250K after 1 year of trading. He then lost all his money within 3 months because the market condition has changed. You must know the drawdown of your trading system over a min period of 10 years.
Medlem sedan Apr 20, 2010
814 inlägg
Jul 01, 2010 at 17:16
The very basic Hit & Run strategy :
1. Divide your money into 4 part. Risk 1 part every month using high gain high risk tactic.
2. Harvest your profit every month and start with Risk 1 again.
3. If lose in the month, top up money to try your luck again.
4. Increase your risk gradually if the system work well.
5. Make it automatic and tested on demo first.
My track record on demo with 500 USD risk each month.
Oct (207.50%), Double
Nov (-62.18%),
Dec(192.44%), Double
Jan(64.08%),
Feb(-99.27%),
Mac(145.51%), Tripple
Apr(50.91%),
May(418.08%), Quarable
Jun(-63.03%),
Forex is a high gain high risk investment, you success if you has a high gain system.
You avoid failure by implement money management.
You get rid of Psychology by develop a fully automatic EA, then you find your truth freedom.
1- System
2- Money Management
3- Psychology
1. Divide your money into 4 part. Risk 1 part every month using high gain high risk tactic.
2. Harvest your profit every month and start with Risk 1 again.
3. If lose in the month, top up money to try your luck again.
4. Increase your risk gradually if the system work well.
5. Make it automatic and tested on demo first.
My track record on demo with 500 USD risk each month.
Oct (207.50%), Double
Nov (-62.18%),
Dec(192.44%), Double
Jan(64.08%),
Feb(-99.27%),
Mac(145.51%), Tripple
Apr(50.91%),
May(418.08%), Quarable
Jun(-63.03%),
Forex is a high gain high risk investment, you success if you has a high gain system.
You avoid failure by implement money management.
You get rid of Psychology by develop a fully automatic EA, then you find your truth freedom.
1- System
2- Money Management
3- Psychology
Information is Gold when come to organised.
Medlem sedan Oct 28, 2009
1430 inlägg
Jul 01, 2010 at 17:42
(redigerad Jul 01, 2010 at 17:48)
Why do you have to equate high gain with high risk?
Why not aim for low risk, high gain?
Why not aim for low risk, high gain?
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
forex_trader_8139
Medlem sedan Mar 04, 2010
423 inlägg
Jul 01, 2010 at 17:48
Forex is not definitely high gain and high risk investment. It is depend on the trader.
SIM
SIM
forex_trader_8139
Medlem sedan Mar 04, 2010
423 inlägg
Jul 01, 2010 at 17:50
Steve, are you sure do have low risk high gain in forex trading? If yes, please share with us.
Thanks in advance.
SIM
Thanks in advance.
SIM
Medlem sedan Oct 28, 2009
1430 inlägg
Jul 01, 2010 at 17:52
pip2cash posted:
Steve, are you sure do have low risk high gain in forex trading? If yes, please share with us.
Thanks in advance.
SIM
I'm not sure yet, but I'm quietly confident.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
Jul 01, 2010 at 20:19
Wow thank you guys for the informati) Never thought that this thread will answered in less than 24hrs.
I'm just wondering, when you guys only risking between 1%-5% of your account, how much capital you need to invest in forex? I mean when you start with usd$100, well thats gonna take awhile to grow to a 'trade for a living account' isn't?
hmm~ isn't be nice when you can double your account in a month. I got this idea, maybe its my 'greed' talking not my logic brain - to double my account each month.
Deposit: $100
1. $200
2. $400
3. $800
4. $1,600
5. $3,200
6. $6,400 // I think this might be a good time to withdraw..
7. $12,800
8. $25,600
9. $51,200
10. $102,400
In the 10th month you account will be as fat as a hippo =) I know Winsor will say ' you're setting yourself up for failure', hehe.. But can this be achieve..? I would like to try this out. I've open a real account in pfgfx worth $100, i hope I don't burn my account along the quest =)
I'm just wondering, when you guys only risking between 1%-5% of your account, how much capital you need to invest in forex? I mean when you start with usd$100, well thats gonna take awhile to grow to a 'trade for a living account' isn't?
hmm~ isn't be nice when you can double your account in a month. I got this idea, maybe its my 'greed' talking not my logic brain - to double my account each month.
Deposit: $100
1. $200
2. $400
3. $800
4. $1,600
5. $3,200
6. $6,400 // I think this might be a good time to withdraw..
7. $12,800
8. $25,600
9. $51,200
10. $102,400
In the 10th month you account will be as fat as a hippo =) I know Winsor will say ' you're setting yourself up for failure', hehe.. But can this be achieve..? I would like to try this out. I've open a real account in pfgfx worth $100, i hope I don't burn my account along the quest =)
Medlem sedan Apr 25, 2010
7 inlägg
Jul 01, 2010 at 20:41
Mmmm Interesting topic here :)
firstly I'd agree with Steve, you can have a high return, low risk strategy if you know your numbers and your 'edge'
By that i mean you know the probablities of your trade setups, Good reward to risk ratio, you know your win ratio and your average Loss/Gain.
and to answer your question genie, yes doubling your account in a month several months in a row is very much achievable however it is in no way at all sustainable, sustainability is one of the most important aspects of trading, it ensures a long and successful career as a trader.
Lee J Brown
firstly I'd agree with Steve, you can have a high return, low risk strategy if you know your numbers and your 'edge'
By that i mean you know the probablities of your trade setups, Good reward to risk ratio, you know your win ratio and your average Loss/Gain.
and to answer your question genie, yes doubling your account in a month several months in a row is very much achievable however it is in no way at all sustainable, sustainability is one of the most important aspects of trading, it ensures a long and successful career as a trader.
Lee J Brown
Medlem sedan Apr 20, 2010
814 inlägg
Jul 02, 2010 at 06:26
stevetrade posted:
Why do you have to equate high gain with high risk?
Why not aim for low risk, high gain?
Well the general equation of Mathematic law already stated : Gain = System(Y) * Risk
System(Y) will be a wave of up and down which sometimes you win and sometimes you lose, an oscillator graph.
So we normally adjust the Risk parameter will result High risk produce high gain.
To get High Gain Low Risk you certainly need a System(Y) which probably manual is the best. Which is the core logic key direct factor to Risk, as already someone give an example that some trader can 2k earn 20k in a month and 20k earn 250k a year yet fail due to Risk MM control.
So what kind of common System(Y) you think of :
Probability factor of Low gain low risk System(Y) : +1, +0.2 ,+0.5, +0.7, +0.3, +1.1, -2, -0.1, -0.5, +0.5,
Probability factor of High gain high risk System(Y) : +2, -1, +1, +0.6 , -3, +1.5, +0.5, +4, -1, +2,
List of Low gain Low risk EA performance > 6 month :
Megadroid work on Alpari UK, 8+ month gain 177.58%.
https://www.myfxbook.com/members/AJR249/eamegadroid/6189
But many other Megadroid account fail compare to above sample of success.
BossEA , 6+ month gain 411.83%.
https://www.myfxbook.com/members/maverick34/maverick-bossea-traxxon/30760
List of High gain High risk EA performance > 6 month :
https://www.myfxbook.com/members/MIDAS/midas1/3877
Unfortunately history record are private, so no idea if it is a FX Genius.
My own KB5 system, 8 month ROI = 929.56%
Not using MM Risk compounding but a Fix Risk ratio and a fix balance every month.
https://www.myfxbook.com/portfolio/i-kill-you-later-2/28333
Information is Gold when come to organised.
Medlem sedan Oct 28, 2009
1430 inlägg
Jul 02, 2010 at 07:10
Midas is a grid martingale system. You have to be lucky when you start it. I've tried it and it damn near wiped a £5000 account and even then it was not giving the kind of returns that this account got.
Even Midas themselves admit this account was a lucky break and lots of others they started have wiped.
This is not high risk - high gain.
It's gambling.
Even Midas themselves admit this account was a lucky break and lots of others they started have wiped.
This is not high risk - high gain.
It's gambling.
11:15, restate my assumptions: 1. Mathematics is the language of nature. 2. Everything around us can be represented and understood through numbers. 3. If you graph these numbers, patterns emerge. Therefore: There are patterns everywhere in nature.
Medlem sedan Mar 03, 2010
22 inlägg
Jul 02, 2010 at 08:39
nice topic
Never Place A Trade Without Stoploss
Medlem sedan Jun 23, 2010
303 inlägg
Jul 02, 2010 at 16:44
(redigerad Jul 02, 2010 at 16:44)
stevetrade posted:
This is not high risk - high gain.
It's gambling.
I agree with Steve - it is gambling! It is the same reason why most of us got into Forex trading i.e. hoping to turn our $100 into $5,000 per month. It is better to use the $100 buying lottery tickets. You will have a better change of getting your picture in the newspaper than with forex gambling.
Medlem sedan Aug 31, 2009
131 inlägg
Jul 04, 2010 at 19:48
Here's a great article I keep bookmarked about setting stops. The author has a very realistic approach to the market and the Money Management principles are very sound. He states...
ALL YOU NEED TO KNOW ABOUT TRADING
* Price either goes up or down.
* No one knows what will happen next.
* Keep losses small and let winners run.
* POSITION SIZE = RISK / STOP LOSS
* The reason you entered has no bearing on the outcome of your trade.
* You can control the size of your loss (skill) but you can't control the size of your win (luck).
* You need to know when to pick up your chips and cash them in.
https://articles.mql4.com/813
ALL YOU NEED TO KNOW ABOUT TRADING
* Price either goes up or down.
* No one knows what will happen next.
* Keep losses small and let winners run.
* POSITION SIZE = RISK / STOP LOSS
* The reason you entered has no bearing on the outcome of your trade.
* You can control the size of your loss (skill) but you can't control the size of your win (luck).
* You need to know when to pick up your chips and cash them in.
https://articles.mql4.com/813
It ain't easy being Cheesy!
Jul 04, 2010 at 21:43
I use this with small accounts.
https://docs.google.com/View?id=dczz2cf_5g6d45nhb
https://docs.google.com/View?id=dczz2cf_5g6d45nhb
