Whats the best Money Management Technique?

Hi guys and gals I was wondering what different types of Money Management Techniques you perfer to use and which you think is the best.

I am thinking of creating a few EAs with some weak entry and exits stratigies and then appling the MM strat to see if I can make the system profitable. So I was hoping to get a few of them here with a brief discription.

Thanks!

Maxss280

Old but Still a goody, in my beliefs.

The 30:8 Rule.
Never have More than 30% of your account exposed to Margin. {assuming you Trade Various Markets. Stocks & Futures & Forex etc.}
Never have More than 8% of Said 30% exposed to One Market.

Save you the Math. 30% * 8% = 0.024 OR 2.4% placed in one of the above mentioned Markets.

Thanks Benmac I meant for just Forex Currency Trading though .

Right now I am currently working on a martingale type MM system with basically RSI going up goes long RSI going down goes short. It has a pretty interesting algorithm for determining the next amount to needed to trade and make a profit with current SL and TP. I uses the trading history to determine this.

After I finish that project I am going to start on another MM system not sure what they call it though. It is where you close out an amount of your position at different TP levels while moving up your SL to previous TP level with the last level kind of like a Trailing stop so you get the max move if it does not stop you out.

Still looking for at least another two to learn and create an EA for with some weak Entry and Exit strat as to prove that it is not really your entry and exit points are not the most important thing it is the MM strat behind it. Or to prove me wrong lol.

Thanks!

I also plan on posting the EA's with their results at the end of this experiment if I make it and if my Test server stop crashing.

Still got a lot of work ahead of me though.

Martingale MM:

The Main problem with this form of MM {as I see it. actually Never tried it} is that Your Initial Lot Size has to be so Miniscule that it allows you to Continue to Add.

How does it handle a Good Trade?
By that I mean, You get in & it rapidly jumps 100 P in your favour.
How would you feel then, knowing that you had the ability to be 'Involved' by a factor of 10, and sitting there Wishing you were?

Just MY opinion but never having been captured by the Las Vegas style of Currency Trading, I have to admit, I have never checked for nuances in the Method.

For me, "Capital Preservation is King" Whether I'm Down Or Up.

Make Sure that, No Matter What Happens with This Trade, You Are Still 'In The Game' when it's over.

My penchant leans more toward policing My Entries & Understanding the point {Price} at which I may be proven wrong. At which point, I should 'Immediatley, reconsider 'The Trade'.

Good Fortune on Your journey.

ps. btw. you can call me Bemac. Not sure if I know any "Benmacs"
pps. 30% multiplied by 8% = 2.4%.

Probably puts me in the Above Average Risk category but I was running Six Traders on this mentality Long before I ever read any MM Pointers suggesting that 2% would be a wise Max Exposure.

No Slam intended. I've been there. This is about Gaining Cargo. Not Ego.

I agree totally and would never use Martingale in an actual live account. Just trying to stay true to creating an EA based more on MM then actual entry and exit points.

However the odds of blowing up the account with that EAs version on a $150 account with only making $9 (60 Pips) on a profitable trade was roughly around 1:32768. I cant remember the exact number but I think that is what I came up with. That is the chance of blowing the account which is not enoguh for me to risk real capital.

I will have too looke at the EAs formula I used to come up with min amount needed to make profitable trade and run the numbers again.

No offense taken . Do you use any type of MM strat on forex currency trading like averaging up/down fatails or anything like that?

Thanks

If you're considering a martingale, I know a much easier method of accomplishing what a martingale will.

Just take the money you were going to use to fund your account and send it to the broker as a gift.

No screen time is required. No worrying about entrances and exits.

Boy oh boy mention martingale everyone gets huffy. Lol must have been bit by it before. But in al honesty I just want to know about different MM strats that you may use or may not use. Just with a description and a name so I can research it some more.

Never s truer word spoken.
MartingaeIs absolutetely the fastet way I could conjure to Lose Your Money Fast,...

Just My View...
I could be wrong...
You get to choose where your Eggs Lay...

If by MM you mean position size, then there's no MM strategy that, in itself, will make you profitable. Expectancy is determined by the accuracy of entries and exits, relative to market moves. MM can not alter expectancy, all it can ever achieve is magnify or diminish both return and risk in like proportion.

The key to MM is to size your positions small and consistent enough to preserve your capital, and thus keep you in the game. Here's the irony: no amount of MM can ever rescue a negative expectancy method, but poor or reckless MM (overleveraging) means that a small string of losses can bring about ruin, even with a positive expectancy method.

Position size (% rof account at risk) should be kept consistent. If you vary the risk per trade, then the bigger positions need to coincide with higher probability setups, to justify the higher risk. If a higher size position happens to result in a loss, then it will take multiple smaller wins just to return to breakeven.

Progressive betting systems (like Martingale) increase risk of ruin without improving expectancy. In posts #31, #32 and #43 of this thread, I've attached XLSs that illustrate how, no matter what betting system is used, it has no bearing on improving overall net expectancy. Download the XLSs and prove it for yourself.

If by MM, you mean including concepts like Risk:Return profile (R-value) and 'trade management' (taking profit, moving stop to breakeven, trailing stops, etc), then I prefer to classify that under 'exits' rather than 'pure MM'. That's because exits do have a significant bearing on system expectancy.

The most informative MM thread I've found on FF is here. There are also good books by Ralph Vince and Ryan Jones on MM - try Google, or search Amazon.com

Just my 2c worth.

Here is a link to some interesting info on MM.

http://www.adaptrade.com/Articles/article-ps.htm

(i have no relation with this site)

Read Hanovers reply very carefully. - You cannot make a losing system a winner by applying an MM strategy.
If u want to really learn more then do read Fred Gehm, Ryan Jones, Ralph Vince.

Ryan Jones used his mm formula when he competed in the robins trading championship publically announcing his mm formula was the best for small accounts and he was supremely confident of beating Larry Williams record, but what actually happened was he traded himself into a 90% drawdown

But you can make a winning system a loser by applying a bad MM strategy.

Seems to me that it's all about walking the line between not exposing your account to blow up, whilst still exposing it to gains. I think that strip is actually fairly wide, but where we individually place ourselves on that spectrum depends on personality. Those who find themselves on the wrong side of the strip get 'educated' soon enough. Over time, trial and error we come to learn where we are most comfortable, so I don't think there is a 'best technique', just one where you don't get killed but still squeeze out some green.