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looking to build aggressive MM strategy

  • #21
  • Dec 30, 2006 6:21am Dec 30, 2006 6:21am
dottore

It would be great if you could go ahead and post whatever you have, something visual would be good.

I am taking a week away from trading to let my eyeballs get back to round, they started going cell shaped(Excel).

I know MM is not the most exciting subject in forex, but just for now it's gone to the top of the list.

I do'nt know much about metatrader, sounds to me like you have that subject covered.

I appreciate your help

Roy
Quoting dottore
)))))

Put here your serie of trades (number of pips and SL) and I'll show you equity curve and explain how to maximize it.

In first approximation I use rigid SL.

You can also obtain equity curve C(VAR) in metatrader putting risk parameter from 0,02 to for example 0,30. This takes more time but is even better if your SL depends on the market conditions.
Polishing my crystal ball
  • #22
  • Edited 8:14am Dec 30, 2006 7:48am | Edited 8:14am
Quoting 30XTCi
dottore

It would be great if you could go ahead and post whatever you have, something visual would be good.

I am taking a week away from trading to let my eyeballs get back to round, they started going cell shaped(Excel).

I know MM is not the most exciting subject in forex, but just for now it's gone to the top of the list.

I do'nt know much about metatrader, sounds to me like you have that subject covered.

I appreciate your help

Roy
))

MM IS exciting subject - because here money are made... )
see attachment...

Currently I'm working on two systems from the attachment. Both have over 100 trades, SL ~~90 pips, period 9 months. Both have relatively low drawdown. Starting capital is $1000.

Horizontal axis - VAR (% of capital in every trade).
Vertical - equity curve.

First maximum (lower) is for VAR = 0,2.

Higher maximum is for VAR 0,28.

What it all means...

1. for the first one - C is between 0,11-015
2. for the second - 0,13 - 0,19.

Operationally I will launch the second one (EA) with 0,1 initially, and if live trades confirm backtest data (there was very good confirmation in earlier versions so I'm pretty sure all will be OK) - we increease VAR to 0,13, then 0,15 and finally 0,19. You should also take into account broker leverage prohibiting you from tahing too large position. For example you can play 1 lot with 250 USd on account in CSMForex, but minimum for 1 lot in neuimex (if I remember correctly) is $1000.

Hope this helps...
Attached File(s)
File Type: zip EA ver_7_0_5 30 dec 2006.zip   86 KB | 340 downloads
Quidquid latine dictum sit altum viditur
  • #23
  • Dec 30, 2006 8:10am Dec 30, 2006 8:10am
Thanks Puppy for correcting my math. I rushed the post and made a mistake.
  • #24
  • Dec 30, 2006 9:35am Dec 30, 2006 9:35am
Quoting 30XTCi
linuxtroll

Thanks, I had a look but not sure, is there a particular section you had in mind?

Have you found a pot of gold at the end of your rainbow yet?

All the best

Roy
Hi all,

I'll keep it as simple as possible.
From my experience, MM is closely related to Win/Loss ratio. When your win/loss ratio is inconsistent, then stick to 1%-2% and go and brush-up on your trading skill first. Don't even think about trying any fancy MM.

However, when you have a consistent Win/Loss ratio, then Begin with the end in Mind.

The steps are:

- "How much are you prepared to lose in 1 trade?"
- Then check your win/loss ratio.
- Ask this question, with your current consistent win/loss ratio, will your account grow, diminish or dissapear completelly?

I know many traders who made a million in less than 1 year with a starting balance of $100 only. They have a very high win/loss ratio. They can afford to go even 25% - 50% Risk. Crazy huh? Not really! They can easily do it by taking only 5pips a day minimum.

You must have at least 10:1 Win/Loss ratio, trading less than 1hr a day.

The steps are:

- They will harvest as many pips as possible on the first month with 10% - 20% MM (remember, high win/loss ratio).
- When they double their money, usually in 1-2 weeks. They took out their original Balance and trade the rest. So they have a 2nd chance.
- Target 5pips only a day!! at 50% MM
- This way they double their account every month, with almost consistent wins! 5pips, c'mon!!
- They ocassionally took $100 every week when the account reached more than $5000
- They repeat the process with the new $100. So they have multiple accounts all at different levels.

Do your math, how much is $100 doubles every month? Thats $1,000.000+ in 9 months. They trade with 100% confidence, because:

- Excellent Trading Skill
- 5pips target a day only (very fast)
- Even when they bust their account (which is rare), they still can start again with the profits ($100) they took out every week. (pressureless and emotionless). They can go on again and again without pumping new funds while still keeping the original $100 safe under their pillow.

Usually, they use PAMM to managed their accounts, which maybe between 10-20 accounts, all at different stages.

The key here is Discipline:

- Know your ability
- Use strict rules on MM according to your win/loss
- Greed has no place in Professional Trading
- Stay humble, it will keep you discipline

Strange things are only strange when you havent get use to it! So, master your trading skill first with very minimal risk, then you may join the rank of these traders.

Crazy huh? Not really!!

-
Change Your Thinking. Change Your Life - JD
  • #25
  • Dec 30, 2006 9:42am Dec 30, 2006 9:42am
Quoting OrangeRoshan

Do your math, how much is $100 doubles every month? Thats $1,000.000+ in 9 months. They trade with 100% confidence, because:

- Excellent Trading Skill
- 5pips target a day only (very fast)
- Even when they bust their account (which is rare), they still can start again with the profits ($100) they took out every week. (pressureless and emotionless). They can go on again and again without pumping new funds while still keeping the original $100 safe under their pillow.

-
Hi Orange, what an excellent post

However we have as almost always a shortcut...

Good Expert Advisor.

Happy New Year to you all!
Quidquid latine dictum sit altum viditur
  • #26
  • Dec 30, 2006 9:50am Dec 30, 2006 9:50am
Quoting 30XTCi
linuxtroll

Thanks, I had a look but not sure, is there a particular section you had in mind?

Have you found a pot of gold at the end of your rainbow yet?

All the best

Roy
Read the whole wiki again...

Not one... Several pots; like OrangeRoshan explained; sometimes with 80% calculated risk (target 2-6 pips)... because Rainbow and CCI will give very high probability trades... LoL
  • #27
  • Dec 30, 2006 10:33am Dec 30, 2006 10:33am
Quoting OrangeRoshan

Do your math, how much is $100 doubles every month? Thats $1,000.000+ in 9 months. They trade with 100% confidence, because:
-
Start with $100 and double it every month

Month 1. 200
Month 2. 400
Month 3. 800
Month 4. 1,600
Month 5. 3,200
Month 6. 6,400
Month 7. 12,800
Month 8. 25,600
Month 9. 51,200

Just a tad off of a million. Seems like you didn't do your math.
  • #28
  • Dec 30, 2006 10:38am Dec 30, 2006 10:38am
Quoting Dopey
Start with $100 and double it every month

Month 1. 200
Month 2. 400
Month 3. 800
Month 4. 1,600
Month 5. 3,200
Month 6. 6,400
Month 7. 12,800
Month 8. 25,600
Month 9. 51,200

Just a tad off of a million. Seems like you didn't do your math.
Before you do your maths - First understand what is PAMM... and compounding several accounts... LoL
  • #29
  • Dec 30, 2006 11:09am Dec 30, 2006 11:09am
Good post Orange! and i'm also enjoying the less "simpler" replys, but it is stretching the ol grey matter, but fun!

Yes compounding will get us there. And even if the math was off a bit (but i think the mil is possible w/Orange's idea of multiple accounts + compounding)... I'd gladly take $51k in a year from a $100 investment!

: ) Thom
  • #30
  • Dec 30, 2006 11:20am Dec 30, 2006 11:20am
http://www.interbankfx.com/pamm_software_overview.php

A pretty good explanation.
  • #31
  • Dec 30, 2006 11:32am Dec 30, 2006 11:32am
Quoting linuxtroll
Before you do your maths - First understand what is PAMM... and compounding several accounts... LoL
So if I start with $1000 after 12 Months I have approx 4 Mill + Change. That's not much compensation for the work I've put in.

My model says I can double my account in 10 trading days,Crazy HeH, not realy.

Linuxtroll, I'm sorry, I did'nt get a chance to read any of the wiki stuff, tomorrow maybe. I like the idea of Multiple accounts at different levels. Thanks for the CCI idea, it's not for me, but if it works for you, good luck.

Did you Know Daryl's MA has been around for about 5 years? I have all his books,(I think). He also did a section in Howard Abell's The Day Traders Advantage, that was about 7 years ago .

Good Trading

Roy
Polishing my crystal ball
  • #32
  • Dec 30, 2006 11:42am Dec 30, 2006 11:42am
Quoting OrangeRoshan
Hi all,

I'll keep it as simple as possible.
From my experience, MM is closely related to Win/Loss ratio. When your win/loss ratio is inconsistent, then stick to 1%-2% and go and brush-up on your trading skill first. Don't even think about trying any fancy MM.

However, when you have a consistent Win/Loss ratio, then Begin with the end in Mind.

-

I agree 100% with everything you say.

Thanks

Roy
Polishing my crystal ball
  • #33
  • Dec 30, 2006 11:45am Dec 30, 2006 11:45am
Are you leaving profits on table? How to find an optimal betting strategy to maximize your equity.

Almost every trader heard about the 2% rule: “Don’t risk more than 2% of your account in a single trade”. I believe this principle (coming from the stock market) doesn’t apply to forex market and I’ll prove it.

This “proof” has also profound meaning to your equity, especially if you are using mechanical systems (expert advisors).

First a simple example.

Let us assume that you have a $1000 account.

You take a position with SL=50 pips with a 10% of your equity ($100)

And you are winning exactly 50 pips…

How much do you have in $?

You risked 100 USD on SL=50 pips and gained exactly 50 so you’ve won $100.

With SL=50 pips, if you win 100, then your gain in dollars is $200.

If you win 25 pips then in dollars you have $50.

This is quite easy to understand:

Gain = [(number of pips won)/SL ] * $100

(number of pips won divided by SL – i call it a market leverage, and multiplied by $100)

Here $100 equals 10% of an account. We call it a VAR – value at risk.

Let’s go a bit further:

Definitions:

C(n) – capital after n-th trade.
VAR – value at risk: % of total capital risked in a single trade.
X(n) – outcome of a n-th trade in pips.
SL – stop loss

Key formula for your equity capital:

C(n) = C(n-1) * [1 + [X(n)/SL] * VAR]

So your capital in the n-th single trade depends on three factors:

C(n-1) – capital after n-1 trades

X(n)/SL – market leverage ( how much you increased/decreased VAR)

VAR itself.

Ok, at this point we are ready to do some spreadsheet calculations:

Put all your trades in a column in excel or similar. (fig 1.)



If you put outcomes of your system in column C (the green one) then the formula (red arrow) should look like:

=$D$2*(1+($C4/90)*E$3)

Where
$D$2 – initial capital,
$C4/90 – market leverage (in this system SL=90)
E$3 – VAR – percent of your account at risk.

Then plot a graph of capital after your series of trades.

It will look similar to the graph below. (fig 2)


Here we have two equity curves depending on VAR for two systems (over 100 trades during 9 months in 2006 for GBP/USD). Initial capital = $1000.

See how both systems have characteristic bell curves.

First one has a maximum at VAR= 0.20, the second at VAR = 0,28.

Divide the distance to maximum for your system into four equal parts.

EXAMPLE:

Maximum at VAR = 0,20

A [0-0,05], B [0,06-0,10], C [0,11-0,15], D [0,16-0,2]

For my purposes I define three strategies:

A – conservative.

B – semi aggressive,

C – aggressive.

D – forbidden -VAR at maximum is too risky although capital at the peak is tempting ))))

VA-s at C and D maximize equity curve.

I believe that this approach is better for automatic trading than for manual. The reason is obvious – high level of stress involved when you risk 15% in a single trade.

Playing forex is risky so strategy with high VAR should be counterbalanced with additional factors – taking a part of an account from time to time (to preserve capital) and dividing capital between accounts (1) and brokers (2).

1. Divide money into two parts and play only on one account using VAR for total account. This will prevent to some extent losses due to force majeure or “other factors”.
2. well, this discussion I will leave for another occasion.

I believe that for proper calculation of capital curve C(VAR) you should have over 100 trades, all from the same, systematically followed system. Do not mix trades from different systems. Plot your equity curve after your system gives YOU consistent, stable profits. Profits of the guy who sold you your system are irrelevant.

How to use these calculations in strategies with Expert Advisors?

Data on the graph are from our EA backtest.
Operationally I will launch the second system with 0,1 initially (end of a B area), and if live trades confirm backtest data (we had a good confirmation in earlier versions so I'm pretty sure all will be OK) - we increase VAR to 0,13, then 0,15 and finally 0,19 (end of a C area).

Some final remarks.

Best systems are the most profitable ones IN THE LONG RUN. Single number of pips gained are irrelevant, Forex is not a sprint it’s a marathon.

I believe calculations as above are the missing MM piece in FX systems and strategies (especially in the automated – expert advisors).

Of course this is only a tip of an iceberg, initial step to build your own strategy. But having a clear understanding how your system performs for different VAR sheds new light for its potential and your earnings. The key word in any profitable system is consistency.


P.S I tried to uploa fig 1 and 2 but failed So I attached the whole post in word. maybe some good soul will improve the languahe there? I wil be very grateful 4 that and repost it.

Thanks!

)))
Attached File(s)
File Type: doc MM - how to maximize your equity curve.doc   132 KB | 577 downloads
Quidquid latine dictum sit altum viditur
  • #34
  • Dec 30, 2006 12:58pm Dec 30, 2006 12:58pm
Quoting Dopey
Start with $100 and double it every month

Month 1. 200
Month 2. 400
Month 3. 800
Month 4. 1,600
Month 5. 3,200
Month 6. 6,400
Month 7. 12,800
Month 8. 25,600
Month 9. 51,200

Just a tad off of a million. Seems like you didn't do your math.
Its multiple accounts and compounding. Just an example of compounding:

<TABLE cellSpacing=0 cols=3 rules=none border=0 frame=void><COLGROUP><COL width=72><COL width=171><COL width=66></COLGROUP><TBODY><TR><TD style="BORDER-LEFT: #000000 1px solid" align=middle width=72 bgColor=#993366 height=17>Month</TD><TD style="BORDER-LEFT: #000000 1px solid" align=middle width=171 bgColor=#993366>Balance</TD><TD style="BORDER-LEFT: #000000 1px solid" align=middle width=66 bgColor=#993366>Risk</TD></TR><TR><TD align=left height=17>
</TD><TD align=left>
</TD><TD align=middle SDNUM="1033;0;0%" SDVAL="0.5">50%</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="1">1</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="258.5">$258.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="2">2</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="676.5">$676.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="3">3</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="1788.5">$1,788.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="4">4</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="4737.5">$4,737.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="5">5</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="12561.5">$12,561.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="6">6</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="33321.5">$33,321.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="7">7</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="88403.5">$88,403.50 </TD><TD align=left>
</TD></TR><TR><TD align=right height=17 SDNUM="1033;" SDVAL="8">8</TD><TD align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="234552.5">$234,552.50 </TD><TD align=left>
</TD></TR><TR><TD style="BORDER-TOP: #000000 1px solid; BORDER-LEFT: #000000 1px solid" align=right height=17 SDNUM="1033;" SDVAL="9">9</TD><TD style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 1px solid" align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="622330">$622,330.00 </TD><TD align=left>
</TD></TR><TR><TD style="BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid" align=right height=17 SDNUM="1033;" SDVAL="10">10</TD><TD style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid" align=right SDNUM="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" SDVAL="1651219.5">$1,651,219.50 </TD><TD align=left>
</TD></TR></TBODY></TABLE>

Record held so far is 4 months and 3 weeks. She harvested a few pips more than the 5pips target. One of our Japanese trading team, only 3 years in Forex!

Like I said, it is not strange when you see it very often. Dopey, stay positive, theres a lot of things out there you havent seen yet. Exciting isn't it?

However, Dont try this at home, its beeeerrryyyy dangerrrrrouuusssss...
Change Your Thinking. Change Your Life - JD
  • #35
  • Dec 30, 2006 1:07pm Dec 30, 2006 1:07pm
Quoting 30XTCi
So if I start with $1000 after 12 Months I have approx 4 Mill + Change. That's not much compensation for the work I've put in.

My model says I can double my account in 10 trading days,Crazy HeH, not realy.

Linuxtroll, I'm sorry, I did'nt get a chance to read any of the wiki stuff, tomorrow maybe. I like the idea of Multiple accounts at different levels. Thanks for the CCI idea, it's not for me, but if it works for you, good luck.

Did you Know Daryl's MA has been around for about 5 years? I have all his books,(I think). He also did a section in Howard Abell's The Day Traders Advantage, that was about 7 years ago .

Good Trading

Roy
Thanks...

Yes, I know Daryl Guppy's MMA; Alan Hull's MMA and even Market Master Dawn Bolton-Smith's MMA... LoL

Do not associate CCI with woodies... even the world successful flipper Paul Rotter likes CCI and p&f chart... works all the time... :o)
  • #36
  • Dec 30, 2006 1:20pm Dec 30, 2006 1:20pm
Hi. I like this subject.


I propose a Reverse Martingale strategy. Each trade maximizes the account size based on the stopout used.

For example, a $1000 account with a 100 pip stopout level, and controlling contracts that are $1.67 tells you to buy 83 contracts. You can lose 100 pips on a single trade with 83 contracts without a margin call.

If you are winning 95 out of 100 trades, and have a known stopout level, you stand to go on a "hot streak" during the 100 trades...

Why not maximize your risk/reward? Buy the max contracts the account can sustain within the margin call level. Mathematically, there is no faster way to grow the account during a winning streak. Don't bet all your bankroll at once (that's why I said $1000 account instead of $20,000 which might be the entire bankroll)

You lose 80% of your $1000..... big deal.... start over with a new $1000..... a winning streak will start an exponential run.....

Oh and lose 80% after a few wins is a break-even.... how sweet is that?

Tom
  • #37
  • Dec 30, 2006 1:25pm Dec 30, 2006 1:25pm
Quoting OrangeRoshan
Its multiple accounts and compounding. Just an example of compounding:

<table border="0" cellspacing="0" cols="3" frame="void" rules="none"><colgroup><col width="72"><col width="171"><col width="66"></colgroup><tbody><tr><td style="border-left: 1px solid rgb(0, 0, 0);" align="center" bgcolor="#993366" height="17" width="72">Month</td><td style="border-left: 1px solid rgb(0, 0, 0);" align="center" bgcolor="#993366" width="171">Balance</td><td style="border-left: 1px solid rgb(0, 0, 0);" align="center" bgcolor="#993366" width="66">Risk</td></tr><tr><td align="left" height="17">
</td><td align="left">
</td><td sdnum="1033;0;0%" sdval="0.5" align="center">50%</td></tr><tr><td sdnum="1033;" sdval="1" align="right" height="17">1</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="258.5" align="right">$258.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="2" align="right" height="17">2</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="676.5" align="right">$676.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="3" align="right" height="17">3</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="1788.5" align="right">$1,788.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="4" align="right" height="17">4</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="4737.5" align="right">$4,737.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="5" align="right" height="17">5</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="12561.5" align="right">$12,561.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="6" align="right" height="17">6</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="33321.5" align="right">$33,321.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="7" align="right" height="17">7</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="88403.5" align="right">$88,403.50 </td><td align="left">
</td></tr><tr><td sdnum="1033;" sdval="8" align="right" height="17">8</td><td sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="234552.5" align="right">$234,552.50 </td><td align="left">
</td></tr><tr><td style="border-top: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);" sdnum="1033;" sdval="9" align="right" height="17">9</td><td style="border-top: 1px solid rgb(0, 0, 0); border-right: 1px solid rgb(0, 0, 0);" sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="622330" align="right">$622,330.00 </td><td align="left">
</td></tr><tr><td style="border-left: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" sdnum="1033;" sdval="10" align="right" height="17">10</td><td style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" sdnum="1033;0;_(\$* #,##0.00_);_(\$* \(#,##0.00\);_(\$* -??_);_(@_)" sdval="1651219.5" align="right">$1,651,219.50 </td><td align="left">
</td></tr></tbody></table>

Record held so far is 4 months and 3 weeks. She harvested a few pips more than the 5pips target. One of our Japanese trading team, only 3 years in Forex!

Like I said, it is not strange when you see it very often. Dopey, stay positive, theres a lot of things out there you havent seen yet. Exciting isn't it?

However, Dont try this at home, its beeeerrryyyy dangerrrrrouuusssss...
Hi, I think I'm missing something here... what is so dangerous if you are starting with $260 ? The most you can lose is $260.

also, what did she do in ~ 5 months?
  • #38
  • Dec 30, 2006 2:20pm Dec 30, 2006 2:20pm
Quoting OrangeRoshan
Hi all,

I'll keep it as simple as possible.
From my experience, MM is closely related to Win/Loss ratio. When your win/loss ratio is inconsistent, then stick to 1%-2% and go and brush-up on your trading skill first. Don't even think about trying any fancy MM.

However, when you have a consistent Win/Loss ratio, then Begin with the end in Mind.

The steps are:

- "How much are you prepared to lose in 1 trade?"
- Then check your win/loss ratio.
- Ask this question, with your current consistent win/loss ratio, will your account grow, diminish or dissapear completelly?

I know many traders who made a million in less than 1 year with a starting balance of $100 only. They have a very high win/loss ratio. They can afford to go even 25% - 50% Risk. Crazy huh? Not really! They can easily do it by taking only 5pips a day minimum.

You must have at least 10:1 Win/Loss ratio, trading less than 1hr a day.

The steps are:

- They will harvest as many pips as possible on the first month with 10% - 20% MM (remember, high win/loss ratio).
- When they double their money, usually in 1-2 weeks. They took out their original Balance and trade the rest. So they have a 2nd chance.
- Target 5pips only a day!! at 50% MM
- This way they double their account every month, with almost consistent wins! 5pips, c'mon!!
- They ocassionally took $100 every week when the account reached more than $5000
- They repeat the process with the new $100. So they have multiple accounts all at different levels.

Do your math, how much is $100 doubles every month? Thats $1,000.000+ in 9 months. They trade with 100% confidence, because:

- Excellent Trading Skill
- 5pips target a day only (very fast)
- Even when they bust their account (which is rare), they still can start again with the profits ($100) they took out every week. (pressureless and emotionless). They can go on again and again without pumping new funds while still keeping the original $100 safe under their pillow.

Usually, they use PAMM to managed their accounts, which maybe between 10-20 accounts, all at different stages.

The key here is Discipline:

- Know your ability
- Use strict rules on MM according to your win/loss
- Greed has no place in Professional Trading
- Stay humble, it will keep you discipline

Strange things are only strange when you havent get use to it! So, master your trading skill first with very minimal risk, then you may join the rank of these traders.

Crazy huh? Not really!!

-
And then what happens when you lose? How much of the profits are wiped out?
  • #39
  • Dec 30, 2006 2:33pm Dec 30, 2006 2:33pm
Quoting 30XTCi

If I told you (guaranteed you) that the next 95 out of 100 trades that you take would return some kind of profit, would that change your MM stategy that you use today, Just a tad, a lot, or completely?

Looking forward to you reply and thanks in advance.

This could be fun.

(Let the flames begin)

Roy.
Yes, MM is important.
BUT...
your proposition contain one mighty assumption.
THAT...
you could actually make a profit on 95 out of 100 trades.
In that scenario it would not matter what your MM is. You could put the whole account on the line a hundred times in a row and make a huge profit even if you made just one pip per trade. Your Profit/Loss ratio would make the rest of us green with envy.

THE POINT...
is that, although MM matters, it matters most where you get in and where you get out.
To be sure the Risk/Reward ratio is important, but I spend more time working on the Win/Lose ratio in my trading than anything else.
That's were the real money is. The more money I have the more I can manage.
  • #40
  • Dec 30, 2006 2:36pm Dec 30, 2006 2:36pm
Quoting permanentjaun
And then what happens when you lose? How much of the profits are wiped out?
You will always have losing trades; but the trick is to end the day with positive 5 pips... and some more for rainy days...
:o)
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