Here is a link on fixed ratio position sizing:
http://www.stator-afm.com/fixed-rati...on-sizing.html
http://www.stator-afm.com/fixed-rati...on-sizing.html
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DislikedFrom the psychological point of view the question is how good can you perform after a substantional draw down . MM is very important but my advise after 30 % draw down try to send new funds to the Acc. to boost the Acc. to the original levelIgnored
DislikedHere is a link on fixed ratio position sizing:
http://www.stator-afm.com/fixed-rati...on-sizing.htmlIgnored
DislikedTo do this with fixed fraction, I'd need to risk between 8 and 15% per trade. The problem is, after a few losses, you are below 50% of your highest balance, which is unacceptable.Ignored
DislikedSo, to compensate for this, if my account draws down 33%, I increase my "drawdown divisor" by a factor of 1.5..... the same is true if the account draws down 66%.... then my drawdown divisor increases again to 2X the original.Ignored
DislikedCan you please elaborate why in your opinion this is not acceptable.. It seems that you can also have a 1096 pip drawdown with only a few trades too. So what's the difference (sorry if I got it wrong)?
How did you come to choose these drawdown values? Did they preform well on backtesting or are they just arbitrary numbers? Why not -
20% drawdown= factor of 1.5
40% drawdown= factor of 2x
60% drawdown= factor of 3x
and so on for extra margin to trade..
Thanks for your help,
OzIgnored
Dislikedthis MM technique was one of the greatest discoveries in trading forex...
My MM goes like this.... I look back at the last 8 years of my trades...
every trade is between 1:3 and 1:5 R:R...Ignored
Everything is correct until this point. The divisor should be 2 X 495, = 990, not 5280....
Disliked50th trade= (my new highest balance was 4000$, and I have now lost 66% (a massive losing streak) of that and made a new higher drawdown in pips )=4000/5280(2640x2)/10=0.07=7 MICRO lotsIgnored
Dislikedmy remaining questions:
1) What PIP DRAWDOWN did you first use (8 years ago?!), how much/long does the data need to be?
2) Is the math correct relatively to yours?
3) When you calculate drawdown levels (33%, 66%), this is from HIGHEST BALANCE, right?
4) In regard to R:R, if my trading plan gives me an opportunity for an 1:1 this is still good with this MM style, right?Ignored
These are methods to help relieve the stress of the WHAMMY.... a string of several losers in a row... In each case, you can start over with a new 10% of THE ENTIRE ACCOUNT.
These are merely suggestions.... the issue needs to be considered if you are going to trade a preconcieved plan.
Disliked..additional margin money (this is not at risk, but need to be available for trade.)Ignored
DislikedIf you trade a pair that pays $8/pip/lot, YOU WOULD DIVIDE BY 8 INSTEAD OF 10!Ignored
DislikedThe MM I posted is extremely aggressive!
So you are risking 10%, and if the account blows, you are left with 90% and whatever interest accrued on the 90%.....Ignored
DislikedEverything is correct until this point. The divisor should be 2 X 495, = 990, not 5280....Ignored
DislikedI don't understand why the need for an extra money deposit.. I can just calculate my "not at risk money" instead, and put that money initially..Ignored
DislikedBtw, my mistake of "dynamic pip drawdown" is actually an interesting idea by itself..Ignored
DislikedHello.
I am sharing my hundreds of hours of work with you in a concise thread...
[...]Ignored
QuoteDislikedhave you ever tought about trading your equity curve? What I have in mind is plotting a simple MA which determins the % of money you risk inorder to smooth your equity curve.
DislikedWell there are two possibilities.
1. Equity over the 30 Period average Risk 1%
2. Equity under the 30 Period average Risk 0.5%
Nothing fancy.Ignored
So in the example in Post #3, I would use a 1500 initial divisor until my account went to 20K.... then start using a 750 divisor. and if the account fell below 10K after it went to 20K, I would use 1500 again, and use 10K as the new high balance.
This is a great way to be less risky with your own money, but be more risky with the house's money. Of course, the trade off is that you will not make as much doing this if you are winning a lot, because you drastically reduce the "butterfly" effect of compounding early winnings.