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What kind of Money Management rules do you have?

  • Post #1
  • Quote
  • First Post: Sep 28, 2007 1:29pm Sep 28, 2007 1:29pm
Would be nice if someone would share them clever money management rules/system more in details?

So far I'm always risking 1% of my account (stop-loss) and looking to 2% gain (limit). That's it.

Any suggestsions regarding money management? There's endless number of threads about trading systems, but a few threads about money management systems.


PS: I have been trading for 6 months now, made some 100 trades and I'm pretty much in the starting point still, with 4% trading account minus (that's around the cost of spreads for 100 trades).

I'm not making money, not losing lots of money. Any ideas what should I change to get better?
i use sommething similar to you not exact but im not gonna write a whole lot. I think key for long term succes is to understand gearing and not overgear ur total account equity in a trade. A gearing of 1:5 is maybe conservative but i think its to high still.So my money management is based on gearing max 1:3 and win loss in percent

revoke
Personally one rule I often add is to lock in profit for a month. Say for example I get to +8% for a month, I may lock in 5% so that would be the worst result possible. Also, I like to move stops to break even when they get to being nicely in profit, so the trade is then risk free.
I use a fixed % of risk per trade and only enter trades with a possitive risk/reward ratio. I also usually scale out of a trade in two steps, moving stop to breakeven as the first target is met.
Quoting WTB
I use a fixed % of risk per trade and only enter trades with a possitive risk/reward ratio. I also usually scale out of a trade in two steps, moving stop to breakeven as the first target is met.
That's it. This is perfect. You know why? Because ONE NEVER NEVER NEVER KNOWS where the price will go the next moment. NEVER. So the protection is the best attack in FX.
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Quoting bullrock
That's it. This is perfect. You know why? Because ONE NEVER NEVER NEVER KNOWS where the price will go the next moment. NEVER. So the protection is the best attack in FX.
I totally agree with that! It does make me laugh when I hear these "Experts" on bloomberg making these bold claims on what price is going to do. Its very rare they are right..
Quoting peterM
I totally agree with that! It does make me laugh when I hear these "Experts" on bloomberg making these bold claims on what price is going to do. Its very rare they are right..
Well they are from the same breed.. HUMANS . And humans always wanted to predict things. There is a whole range of sciences and complex mathematics allocated to that. I dont want to see the future I want to see my account to grow.
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I'm using fixed ratio money management for better growing factor than fixed fractional.
I used to be schizophrenic, but now we are sane.
Quoting bullrock
Well they are from the same breed.. HUMANS . And humans always wanted to predict things. There is a whole range of sciences and complex mathematics allocated to that. I dont want to see the future I want to see my account to grow.

I agree that predicting price movements anything more than 50% correctly in the long term (with 1:1 MM) is impossible or at least freaking hard.

So shouldn't we then be able to make money with flip of a coin and only using money management? Well, profitable money management seems to be similar "holy grail" myth as trading systems. Otherwise you could only use money management and your coin to trade, well life isn't that easy
Quoting bullrock
Well they are from the same breed.. HUMANS . And humans always wanted to predict things. There is a whole range of sciences and complex mathematics allocated to that. I dont want to see the future I want to see my account to grow.
Yep.. me too.. I just wait for high probability setups to arise... Its often too much like guessing trading your "predictions". Like you mentioned earlier.. anything can happen, at anytime, unexpectedly, so we gotta be prepared.
Quoting peterM
I totally agree with that! It does make me laugh when I hear these "Experts" on bloomberg making these bold claims on what price is going to do. Its very rare they are right..
Yeah.....must be great to be getting paid what those guys get and still be such an incredible screwup....I'm sure it makes their mamma's proud.

deffinition of an EXPERT.....
X= an unknown, and sPERT = a drip under pressure.....

oh yeah , the MM thing. I trade trend momentum and move to BE as soon as possible then let it run with a trailing stop. nothing too complicated in that.
Same Whore .... Different Dress
My risk/reward ratio is 1:9 and 1:17.

Works great for me!

And yes, even me cannot predict the future
Quoting johnedoe
Yeah.....must be great to be getting paid what those guys get and still be such an incredible screwup....I'm sure it makes their mamma's proud.

deffinition of an EXPERT.....
X= an unknown, and sPERT = a drip under pressure.....

oh yeah , the MM thing. I trade trend momentum and move to BE as soon as possible then let it run with a trailing stop. nothing too complicated in that.
.
I risk 4% on normal trades but during times when the carry trades are unwinding as they were back in August I will risk 25-30%.
Thats a lot of risk.. how have you been doing ?
Well the first 8 months of trading I had no method and lost big time, since July I have been sticking with a new method and have been in profit. I was able to increase my account by 80% just from the carry unwinds back in August using the extra risk.

edit - This is on a small account <$1500 and one that would make no difference to me if I blew it all so I don't mind taking a little extra risk.
Quoting imbiber
Well the first 8 months of trading I had no method and lost big time, since July I have been sticking with a new method and have been in profit. I was able to increase my account by 80% just from the carry unwinds back in August using the extra risk.
I think most people are the same initially, I know I was..
Quote
edit - This is on a small account <$1500 and one that would make no difference to me if I blew it all so I don't mind taking a little extra risk.

Thats fair enough.. I prefer to treat my account like I am trading my life savings.. even though I am not, far from it. It helps me to remain disciplined and focused.
Quoting mjollnir
I'm using fixed ratio money management for better growing factor than fixed fractional.
How is it working for you? Have you gone back and analyzed how your account would have done with a fixed fractional model instead?

What size delta are you using?
To be one with the market, you must first be one with yourself.
I'm currently using a fixed fractional with multiples on volatility for normalization.

As an example, I would take a 0.3 multiple on GBPJPY. I keep them pretty static and discretionary, i'm looking into using ATR instead to maintain consistency.
To be one with the market, you must first be one with yourself.
  • Post #20
  • Quote
  • Last Post: Sep 29, 2007 9:34pm Sep 29, 2007 9:34pm
Quoting SomedayIwill
Would be nice if someone would share them clever money management rules/system more in details?

So far I'm always risking 1% of my account (stop-loss) and looking to 2% gain (limit). That's it.

Any suggestsions regarding money management? There's endless number of threads about trading systems, but a few threads about money management systems.


PS: I have been trading for 6 months now, made some 100 trades and I'm pretty much in the starting point still, with 4% trading account minus (that's around the cost of spreads for 100 trades).

I'm not making money, not losing lots of money. Any ideas what should I change to get better?

This idea may help http://www.forexfactory.com/showthread.php?t=47732
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