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Attachments: Capital Weightlifting Championship
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Capital Weightlifting Championship

Quoting Matts Micro
{quote} On the first try the answer is no. You just top up the Trading account from the Principal account so the risk stays the same. If you already have the first or second level up and you lose then the answer is yes. You drop the risk back to the previous level.
Very clear, thank you....
I think I have good news for you!! I did a monte carlo simulation, using 10,000 iterations, repeated the test 3 times. Here are the results

Mean Variance Lower CL Upper CL Valid iterations Time taken
4.668 30878 -420 280 10000 23 sec (Test 1)

Mean Variance Lower CL Upper CL Valid iterations Time taken
2.544 31697 -430 270 10000 23 sec (Test 2)

Mean Variance Lower CL Upper CL Valid iterations Time taken
6.275 29416 -420 270 10000 23 sec (Test 3)

I used 0.67 losses 0.33 wins (dice method, no knowledge edge). As you can see you still have a positive expectancy.
I used $10 risk to start with. So as a result, 10,000 series (reaching 3 wins counts as 1 series)
First Test you would make $46,680
Second test you would make $25,440
Third test you would make $62,750

Congrats to you. Just with mm you turned a random probability trade into a winner...
One more thing.

On average reaching 3 wins takes about 12 trades average. Minimum 0 trades (meaning you haven't reach 3 wins in 200 tries), maximum 48 trades.

I think this is important too.
Quoting GoldTheHun
Here are the results Mean Variance Lower CL Upper CL Valid iterations Time taken 4.668 30878 -420 280 10000 23 sec (Test 1) Mean Variance Lower CL Upper CL Valid iterations Time taken 2.544 31697 -430 270 10000 23 sec (Test 2) Mean Variance Lower CL Upper CL Valid iterations Time taken 6.275 29416 -420 270 10000 23 sec (Test 3)

Congrats to you. Just with mm you turned a random probability trade into a winner...
I am not sure what the numbers you posted say but what is also important is this:
How big was the biggest position taken?
How big was the drawdown?
You know even a martingale system will make money in the long run but as we all know it is not possible to trade it..

Arctic4x
Quoting GoldTheHun
I think I have good news for you!! I did a monte carlo simulation, using 10,000 iterations, repeated the test 3 times. Here are the results Mean Variance Lower CL Upper CL Valid iterations Time taken 4.668 30878 -420 280 10000 23 sec (Test 1) Mean Variance Lower CL Upper CL Valid iterations Time taken 2.544 31697 -430 270 10000 23 sec (Test 2) Mean Variance Lower CL Upper CL Valid iterations Time taken 6.275 29416 -420 270 10000 23 sec (Test 3) I used 0.67 losses 0.33 wins (dice method, no knowledge edge). As you can see you still have a positive...
Wow thank you very much for this.

I think this is what I have being pointing at but unable to communicate very well. I sorta think things through in my head as I'm watching my trades and as I thought about this system pieces kept snapping into place with a bit of a wow factor. It's a very simple method but Ima bit like a Treant from the Lord of Rings who uses too many words to explain a simple thing and lose people along the way

Thanks again for this, it gives me a little more confidence that I'm on the right path
Discard hope, Embrace fact
Quoting Arctic4x
{quote} I am not sure what the numbers you posted say but what is also important is this: How big was the biggest position taken? How big was the drawdown? You know even a martingale system will make money in the long run but as we all know it is not possible to trade it.. Arctic4x

Worst losing during 10,000 series would be -$420,000
Highest gain would be $280,000

Starting with $10 risk initially
Min risk would be $40, Maximum risk would be $160
Quoting Matts Micro
{quote} Wow thank you very much for this. I think this is what I have being pointing at but unable to communicate very well. I sorta think things through in my head as I'm watching my trades and as I thought about this system pieces kept snapping into place with a bit of a wow factor. It's a very simple method but Ima bit like a Treant from the Lord of Rings who uses too many words to explain a simple thing and lose people along the way Thanks again for this, it gives me a little more confidence that I'm on the right path

You are very welcome. It is your idea, so I should thank you for bringing it out.
One more thing I should point out that I always started with $10 for a new series. I think you increase the risk after increasing your capital. I didn't apply that. FYI
Quoting Arctic4x
{quote} I am not sure what the numbers you posted say but what is also important is this: How big was the biggest position taken? How big was the drawdown? You know even a martingale system will make money in the long run but as we all know it is not possible to trade it.. Arctic4x
Draw down is an important question. On this system this how it works.

From a standing position, meaning you haven't won any trades, a lost trade will cost 5% of the account. If a loss is acquired after a win then your capital wont be affected it will just mean there is more work to do to get to +3 net trades.

So a lost trade from the standing position is 5% (actually increases slightly with each loss until 10 losses where it reverts back to 5%). A winning round of +3 trades is +80%. Basically said if a person believes they can get to +3 net trades within 8 tries (not losses because as I mentioned above they equate to a different measure) then this system will be profitable for them.
Discard hope, Embrace fact
Quoting GoldTheHun
One more thing I should point out that I always started with $10 for a new series. I think you increase the risk after increasing your capital. I didn't apply that. FYI
Yer that's correct. I increase the starting risk every time the account is doubled.
Discard hope, Embrace fact
Quoting GoldTheHun
{quote} Worst losing during 10,000 series would be -$420,000 Highest gain would be $280,000 Starting with $10 risk initially Min risk would be $40, Maximum risk would be $160
Thank you.

But i am still not sure i understand 100%.
You say min risk was $40? But if you start with $10 i guess the min risk is $10 or am i missing something?

And when you say "worst losing" wold be -$420,000 that is the same as a drawdown in the acc is -$420,000 right?

Sorry for all the questions but i just want to make sure i get it 100% right.

Thanks
Arctic4x
Quoting Arctic4x
{quote} Thank you. But i am still not sure i understand 100%. You say min risk was $40? But if you start with $10 i guess the min risk is $10 or am i missing something? And when you say "worst losing" wold be -$420,000 that is the same as a drawdown in the acc is -$420,000 right? Sorry for all the questions but i just want to make sure i get it 100% right. Thanks Arctic4x

You're welcome. As for the questions, no problem at all.

Yest you start with $10, as you know Matts system says "you don't quit until you are +3 wins". So by the time you reach +3 wins, your risk becomes minimum $40 (this means you reached it very quickly), maximum $160, meaning you have struggled a while reaching the +3 wins threshold.

As for the -$420,000, yes you are absolutely right, it is a drawdown. But this figure is for 10,000 series. Which is roughly 120,000 trades on average.
Quoting GoldTheHun
{quote} You're welcome. As for the questions, no problem at all. Yest you start with $10, as you know Matts system says "you don't quit until you are +3 wins". So by the time you reach +3 wins, your risk becomes minimum $40 (this means you reached it very quickly), maximum $160, meaning you have struggled a while reaching the +3 wins threshold. As for the -$420,000, yes you are absolutely right, it is a drawdown. But this figure is for 10,000 series. Which is roughly 120,000 trades on average.
Good to see the numbers added up. Frankly I would have still backed his reasoning if your results were -ive, just look at the concept! I've been thinking on how to work out a similar method so I kind of really get the reasoning behind it, balancing minimizing risk while maximizing reward is pretty much the biggest hassle for any serious trader past the 'practice' stage. When I have the time, I will be coding this MM into an EA, if and when I do, I will be sure to let you know guys know.
Quoting sinqua
{quote} Good to see the numbers added up. Frankly I would have still backed his reasoning if your results were -ive, just look at the concept! I've been thinking on how to work out a similar method so I kind of really get the reasoning behind it, balancing minimizing risk while maximizing reward is pretty much the biggest hassle for any serious trader past the 'practice' stage. When I have the time, I will be coding this MM into an EA, if and when I do, I will be sure to let you know guys know.
That would be interesting to see thanks sinqua.

On top of the way I trade 2:1 if someone wanted to use this system for lower risk it would also be possible. It could say use a 2-3% risk from the Principal account and even 1:1 trades in the Trading account with as many trades as wanted to get to next level. Using the same theory of when the Trading account doubles increasing the risk then you would have a few trades to cushion the fall and keep the current R:R until having to drop a level. I just use 2:1 because that's what I'm used to and I think many professional traders would be looking for that ratio too.

Keep us informed if you choose to make an EA, would be great.

Cheers,
Matt.
Discard hope, Embrace fact
Quoting GoldTheHun
{quote} You're welcome. As for the questions, no problem at all.
Thank you very much. I get it now.

Then i have two questions to Matts Micro:

With a drawdown like that it is clear that to trade this MM-system you will need a good winning trading system with a clear edge to get the drawdown to a tradeable size.
Why use a MM like this if you already have a winning system with a good edge?
I am sure you will make just as much money (probably more) with less risk (probably far less) just flat trading your good winning system in the first place...

And why are you using two accounts? I am not asking HOW you are using them but WHY?
I know how you are using them but i have no clue why...

Thanks
Arctic4x
Quoting Arctic4x
{quote} Thank you very much. I get it now. Then i have two questions to Matts Micro: With a drawdown like that it is clear that to trade this MM-system you will need a good winning trading system with a clear edge to get the drawdown to a tradeable size. Why use a MM like this if you already have a winning system with a good edge? I am sure you will make just as much money (probably more) with less risk (probably far less) just flat trading your good winning system in the first place... And why are you using two accounts? I am not asking HOW you...

Hi Arctic, great questions.

The answer to the first is a little multi layered. Firstly I want to say that I do I have a "normal" account that I trade for everyday profits (and losses) with more reasonable risk levels. The main reason I built this system is because of my trading history. I have been aware for quite sometime that my profits and losses happen in waves (just like you see on a chart). The reason I believe this is happening is because of market confidence (and in times of loss -lack of). My trading tends to be waves like this: 1 loss, 2 wins, 1 loss, 2 wins, 2 loss, 3 wins, 2 loss, 1 win, 3 loss... in other words when I'm winning I tend to get a few wins in a row and the same goes for when I'm losing. With this system when I manage to win a few in a row and manage to get +3 net trades the rewards are far greater than just a 2-3% account. When I am losing however I am keeping losses at a static level and not over using too much risk. 5% may seem a lot but not every trade lost is using 5% capital. If it follows a win then I have broken even.

I put a couple of systems in this post (right of chart). Ignore the R2R (rags to riches) I just put that there because I have being trying to do this for a while.
http://www.forexfactory.com/showthre...05#post8485705

The second answer is a bit easier and just to do with book keeping. It makes it easy to see where you're at and also in my case it reinforces a bit of my discipline. Sometimes (not so much lately but certainly earlier on in the piece) I was tempted to give trades "just that little more space" and my account would suffer for it. Also it is a safety net when using higher leverage to keep it away from my main account.

Cheers,
Matt.
Discard hope, Embrace fact
Quoting Matts Micro
Just thought I'd share a typical 2:1 trade. This is one I am in atm with a risk reward of roughly 45:90 pips. It may or may not complete but if it has another break downside I may be looking at moving the stop to break even (I have quite a few break even trades when trading 2:1). {image}
Trade complete. I am actually at level 2 from last week and it is the second time I have been here. I would have already completed this series had I not placed a long GU trade last Wednesday less than 15m before the manufacturing release. Went to make a coffee and my stop was taken... was so noob and was such a moment... Anyhows can't beat self up over these things and was just (another) reinforcement to check the time/news releases.
Attached Image (click to enlarge)
Click to Enlarge Name: eurjpy #17.png Size: 69 KB
Discard hope, Embrace fact
Hi Matt.

Why did you decide to go with 2 accounts in the first place? Your method seems equally achievable using only one account. Was it clarity? Additional control? Ease of implementation?


Thanks
Marijan
Quoting marijan993
Hi Matt. Why did you decide to go with 2 accounts in the first place? Your method seems equally achievable using only one account. Was it clarity? Additional control? Ease of implementation? Thanks Marijan
Hi marijan,

You are quite right, this is totally achievable with just one account. It has a bit of a history to why I use two. I used to do the Rag to Riches MM system (mentioned in opening) and I used to fund an account from another account in my attempts. I have used both accounts for testing for quite a few years. This is how I sort of came about this system. I often got a few levels up in the R2R 2:1 R:R system that continually doubles the account while risking half of it. A couple of times I got to level 6 which is over 3k but then dwindling the account back down to a couple of hundred. I then got thinking about how I could save and add capital using this system. So I started withdrawing from the R2R account and saving it in the other account for future attempts.

So to answer, I suppose I just got used to using two accounts and found that it benefits me greatly for a number of reasons. Having a clear line of risk that can be seen in the trading account creates discipline for me. I also know where I am at all times without having to check my history (or my spread sheet) to know where my cut off for a particular trade is at (I am forgetful at times ). The transferring of capital after a successful trade also feels like I am banking my efforts and gives me a sense of accomplishment.

So again, like you said it is totally achievable using one account. I just think it improves my trading emotionally when I can take money off the table and into the "bank".

Cheers,
Matt.
Discard hope, Embrace fact
I have being thinking for a while of starting another account with this system. 60-100 pips can take quite a few hours to complete and while I'm waiting I often notice other potential trades (that I often take with my main acc.) on other pairs. I am thinking in due time if this system continues to work, of using another account that feeds from/to the same Principle account. Will be some time before that happens however as it is important to do the ground work first.

Currently short on UJ and close to trade TP. It will be the 3rd net trade of the series and if it completes I will be able to top up my Principle acc. again. Currently at tough support but a nice comment from Kuroda sped things along a bit .
Discard hope, Embrace fact
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