Money Management secrets

hello ... traders ...

it is probability game . no one have perfect system . anyone ever fail . but if we have good money management even fifty fifty probability we may survive the balance .

share your money management here ! maybe be you can carrying something from others !

my money management is 5% balance . find good setup . first entry half lot . but when fail second entry full lot . get profit or get equity back ! .

what yours ?

thanks

A good Money Management tip is to never risk more than 1% of total equity on any trade. The reasoning behind this approach is that you will not be depended on any single trade. You may be wrong on 15-20 trades but will still have 80% of your investment.

Greetings. I will explain a pyramiding trading strategy.
The strategy increases the number of trades as profit is made after the initial position, while moving the stop loss to a safer point each time.
First, let's make sure we understand the steps of the strategy:

1. First trade: Enter with basic signal, set TP and SL. The monetary value of SL will remain fixed.
2. Second trade: When the first trade reaches the BE (break-even) level, open the second trade (lot = initial lot * 0.75). Adjust the SL of all positions according to the monetary SL value at the opening of the first trade.
3. Third trade: When the total balance of the first two trades reaches a new BE level, open the third trade (lot = initial lot * 0.5). Again update the SL of all positions.
4. Exit: Either close all positions if they reach TP, or all positions close at SL.

To code this strategy, we will need to manage multiple positions. Each time we add a new position, we will recalculate and adjust the stop loss for all open positions.
First, we will need global variables:

1. The price, SL and TP values when the first position was opened
2. Lot multipliers for each position (1, 0.75, 0.5, ...)
3. Maximum number of positions (e.g., 3)
4. Monetary SL value of the first position (risk amount)

Step by step:

1. Open first position: When signal comes, open position with determined lot. Set SL and TP.
2. Check if the first position has reached BE: BE could be the position's opening price + (TP - opening price) * a ratio? Actually, the BE level means the point where the position breaks even, including net zero with spread and commissions. But here, it should be understood as reaching a certain profit level. The text mentions "monetized SL value". So when the profit reaches the monetary value of the initial SL (e.g., $100), the second position is opened.

"When the first trade reaches the determined Break-Even (BE) level". This BE level is not the point where the net profit of the first position is zero, but the point where profit equal to the monetary value of the initial SL has been earned.
So, when the first trade is opened, a certain monetary risk is taken (e.g., $100). When the trade becomes profitable and this profit equals the initially risked amount ($100), the second trade is opened.
Similarly, after the second trade is opened, when the total profit of the first two trades again reaches $100 (i.e., the initial risk amount), the third trade is opened.
In this case, the BE levels are actually monetary profit targets:

1. Profit of first position = initial risk amount → open second position
2. Total profit of first two positions = initial risk amount → open third position

The stop loss adjustments are made so that every time a new position is opened, the stop loss of all positions is adjusted to preserve the monetary risk of the first position's opening (i.e., total loss will not exceed $100).
Additionally, if TP is reached, close all positions. It can also close from SL, but the SL is common and adjusted dynamically.
However, the SL is recalculated and adjusted with each new position. The SL should be adjusted to preserve the monetary risk at the opening of the first position. So, using the current profit/loss status of the total positions and the initialRisk, a price level should be found such that if all positions are closed, the loss will not exceed the initialRisk.
For example, when the first position is opened, initialRisk = $100. Let's say we opened a trade with 1 lot and placed a 100 pip SL, if each pip is $10, then 100 pips * $10 = $100 risk.
When the second position is opened, the profit of the first position has become $100. Now, two positions are open. The stop loss of all positions will be moved to where the total loss will not exceed $100. That is, it will stop when the total of two positions reaches a $100 loss.
The same logic applies when the third position is opened.
For this strategy, all positions must be on the same symbol and in the same direction (all buy or all sell).
Below, I'm sending the open code structure written with this strategy that you can add to your own strategy.

The 1% risk cap per trade has kept me in the game. I pyramid only with locked-in profit and keep total monetary risk constant across adds. If vol expands or momentum stalls, I stop adding and protect equity

What about if the first position become a loss?
You just take the loss and move on?

Yes, there is no insistence on losses. If you experience losses multiple times a day, you should not trade that day.

Are you having success with that money management?

That must depend on your win-rate and profit factor, surely?

If you have a system with a win-rate of 30%, where the losers each cost 15 pips but the winners each bring in 55 pips, you wouldn't want to "not trade that day", would you?

It's just an example, but that would be a hugely profitable system, making a net profit of +6 pips per trade over the long term.

It will sometimes have a losing run of 15-20 consecutive trades, though (like any profitable system with a win-rate around 30%), but it wouldn't work at all if you adopted the philosophy of "If you experience losses multiple times a day, you should not trade that day", would it?

Van K. Tharp explains all this pretty neatly in his beginners' book Trade Your Way to Financial Freedom, and also explains why it may actually be much easier for many people to make steady profits from systems with win-rates around 30-35% rather than (as so many beginners wrongly imagine) from those with win-rates around 66-70%.

I use 1% stop loss and maximally open 5 trades at one time and for TP do not choose smaller than 0.75 and do not choose bigger than 1:2