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  • #41
  • Edited 6:50pm Sep 16, 2008 6:39pm | Edited 6:50pm
i don't see how this is even loosely related to what i've talked about. by the way, i am not a fan of putting TA on equity curves (or TA for that matter!) i think those guys that trade fibonacci bounces off of RSI are morons.

anyway, monte carlo rules! sometimes you have 10 winners in a row, sometimes 10 losers, and sometimes a mixed bag. you throw the baby out with the bath water when you try to guess what is coming next. accept it, expect it, plan for it, and move on.....

Quoting Tjpld
have you ever tought about trading your equity curve? What I have in mind is plotting a simple MA which determins the % of money you risk inorder to smooth your equity curve.
  • #42
  • Sep 16, 2008 7:27pm Sep 16, 2008 7:27pm
I agree that compounding is magic, and the most powerful force on this planet.

Reminds me of Long Term Capital Management. Pulitzer prize winning genius economists that form an EA that was designed to make shareholders wealthy.

Of course they went bankrupt in 1998 ruining many investors lives. Their flaw is that linear thinking cannot calculate markets that are made up of human psychology factors greed/fear, positive/negative moods, etc.
  • #43
  • Sep 16, 2008 7:43pm Sep 16, 2008 7:43pm
Show me somewhere else this MM has been published.... I'd like to see it....

Quoting FXoffshore
"Nothing New"
  • #44
  • Sep 16, 2008 9:04pm Sep 16, 2008 9:04pm
Quote
i don't see how this is even loosely related to what i've talked about. by the way, i am not a fan of putting TA on equity curves (or TA for that matter!) i think those guys that trade fibonacci bounces off of RSI are morons.

A question, up till now, is how you handle your divisor. All a simple MA would do is tell you whether your equity is going up or going down more a set amount, and could be used to systematically define it.
  • #45
  • Sep 16, 2008 9:40pm Sep 16, 2008 9:40pm
well, it is systematically designed to decrease after a 33% drawdown. that's why it works.... it isn't constantly reducing lot size to compensate for drawdown.... that defeats the purpose.
  • #46
  • Sep 20, 2008 10:17am Sep 20, 2008 10:17am
Hi again tdion,

Quoting tdion
i'd rather use a higher initial divisor to mitigate risk than get into fixed fraction (or "dynamic pip" as you say)
Are you referring to post post 39? or never recalculating the divisor (post 17)? or maybe both?

Quoting tdion
No limit to open positions..
that's theoretically speaking right? I know it's kinda beside this thread (or even MM), but do you respect correlation?

Quoting tdion
I am attaching the RAW PIP PERFORMANCE of my strategies for 2008 that my graph in post #1 is derived from....
Do you maybe happen to have a graph for the 8 year showing the 750 max drawdown in pips? (and if you can circle it for those of us who are visualy challenged..:nerd:it would be appreciated)..

Quoting tdion
Another concept I am looking into is "on demand."
Hold that thought.. It may be safer just sitting in the account..who knows what will happen after Lehman Brothers..


I think you covered everything here.. Thank you for sharing your work and ideas with us and for this great thread !
  • #47
  • Sep 20, 2008 3:45pm Sep 20, 2008 3:45pm
Q1) either one. p #39 makes the most sense for my style of trading.

Q2) you can make the max open positions equal to the max that were opened in your backtest.

- do i respect correlation? don't know enough to give an opinion.

Q3) http://www.forexfactory.com/showpost...6&postcount=51



Thank you for the compliment.

Quoting ozwilson
Hi again tdion,



Are you referring to post post 39? or never recalculating the divisor (post 17)? or maybe both?



that's theoretically speaking right? I know it's kinda beside this thread (or even MM), but do you respect correlation?



Do you maybe happen to have a graph for the 8 year showing the 750 max drawdown in pips? (and if you can circle it for those of us who are visualy challenged..:nerd:it would be appreciated)..



Hold that thought.. It may be safer just sitting in the account..who knows what will happen after Lehman Brothers..


I think you covered everything here.. Thank you for sharing your work and ideas with us and for this great thread !
  • #48
  • Sep 20, 2008 7:09pm Sep 20, 2008 7:09pm
hum, this may be obvious to some.. but are the numbers on the y axis your $ balance and the x axis represents the number of trades taken? I believe there is a 750 PIPS drawdown somewhere in that chart but I can't spot it really.....

P.s. as for correlation (with backtesting or not..) I think you should consider this subject seriously as not to multiply your risk. especially with your aggressive MM style.. check out http://fxlabs.oanda.com/cgi/fxlabs.pl?id=4 for starters...
  • #49
  • Jan 5, 2009 5:26pm Jan 5, 2009 5:26pm
Quoting Tjpld
Hey tdion,

have you ever tought about trading your equity curve? What I have in mind is plotting a simple MA which determins the % of money you risk inorder to smooth your equity curve.
old post. But the first time i read it i forgot to put the link with an example of what he is saying:

http://www.forexfactory.com/showpost...&postcount=219
  • #50
  • Jan 5, 2009 6:04pm Jan 5, 2009 6:04pm
Quoting tdion
The reason you divide by 10 after the divisor is THAT IS THE DOLLAR PER PIP per standard lot!

If you trade a pair that pays $8/pip/lot, YOU WOULD DIVIDE BY 8 INSTEAD OF 10!



THIS IS VERY IMPORTANT!

Mixing pairs that have different $/pip/lot can make calculations extremely complex.... you'd need to make the calculation for each pair's $/pip, then constantly keep up with the lot sizes for that pair. Too complex for most people to grasp, I'm sure.

It is ideal for people that trade only a single currency, or a set of currencies...
i got too bonus account ($50 and $100) and was planning to use this MM. So i came here again to reread and make the necessary effort to create a spreadsheet to calculate the risk per trade. But after read this i think i will not able even to try it.

i am planning to trade even AUDCAD, NZDCHF, etc.

so i will only request that if someone try this mm and make a spreadsheet in the future to be kind enough to share it with the next correct lot for each pair.

but i have a question to Tdion or others that undertand 100% this. It have to do with the question Rabid made early in this thread. The lots could not be translated in % of the account? It could help in distribute the wins and loses, no? It will hurt the main edge of the mm? It would help in the calculation.

i am asking because with FxtraderPro martingale he did not realized that it could be done in this way until i asked him:

http://www.forexfactory.com/showpost...3&postcount=97

in fact after years in all these forums i never ever seen a mm with focus in increase the lots fine tunning in terms of %, it is awyas multipling lots.

sorry Tdion, i am not trying to change you mm, only thinking about a easy way to me apply this. Thanks for share it.
  • #51
  • Jan 23, 2009 2:41am Jan 23, 2009 2:41am
I agree with whoever said it, this is money management with Balls.

Im going to try it with my method after I have managed to double the account(demo). Might need adjusting a little for my negative RR, and a guestimation to be made for my drawdown, maby 3 consecutive losses.

Thanks for this contribution to FF, Its worth alot more than the 'gifts' alot of the Idolised members have given.

Leon
Living the adventure in my head.
  • #52
  • Edited 6:27am Jan 23, 2009 4:10am | Edited 6:27am
real fast for giraia

here's how to do it

say the account is 10K

say the max DD is 1000 pips

the size per lot for EURUSD is 10,000/1000/10 or 1.0 lots

the size per lot for USDCHF is 10,000/1000/8 or 1.25

so on and so forth

how do you know you are right? multiply the lots X the $per lot X the pips, and it will give you your bank account size



leon... i do the same thing myself. i wait until my account is up 50% and then i drop my divisor substantially.... riskier w/ house money is the only way to protect initial capital and still have a chance at ungodly compounding.
  • #53
  • Jan 23, 2009 5:45am Jan 23, 2009 5:45am
Thank you tdion for starting this thread J
Here I would like to share how I have been doing it for quite some time now..
As an aggressive trader, I tend to risk about 10% of my balance per trade , as I see aggressive strategies tend to risk something in between 8-12% per trade.
Let’s say I have an account of 1000 USD and I tend to risk 10% (100 usd )
Then I take this amount (100 usd ) and divide it with one of the following factors :
1-The largest loss I have encountered, and this is a safer strategy .
2-Or the distance from my entry to stop.
This then will lead to the number of lots I trade.
100 / 250 pips (the largest loss) = 0.4 lot.
This strategy seems to make phenomenal results to your balance but the problem of wiping out still exists and I think it will not be removed for the following reasons:
1-Lack of self control
2-Plunging into a trade
3-Trading too many lots and ignoring the a/m strategy and this usually happens after a streak of winning trades.
So for whatever strategy to work, we need to control our emotions as we tend to control our risk.
As so many times we get blind and found ourselves plunging into trades that don’t go with the minimal requirements of our system to enter a trade.

I seen it when I sometimes doubled and tripled my account then I gave up all the profits just for psychological reasons, nothing related to trading or MM.
No I violate the rules that I know by heart, till the market give me a lesson in humility and then I’ back to my normal state of mind to continue my trading.
Good stuff on MM are hard to be found .. thank you tdion
Enter Signature
  • #54
  • Jan 23, 2009 9:36am Jan 23, 2009 9:36am
tdion,

I have thought about this thread, a lot, over the last week or so. I will avoid all the filler stuff and cut to the chase:

What is your ultimate goal in $ terms? Given enough time and trades you will eventually go bust---but in the short run you may well be able to hit enough winners to accumulate a handsome sum. I have tried to come up with a calcuation to dertemine the odds of turning 10K to 500K using your MM style, but I cannot. There are just too many variables. If you know how much you want before you start, and are willing to walk away when you achieve it, then you will most likley succede. You may have to blow a couple of accounts to do it, but you will hit a "good patch" of trades at some point and that will put a lot of money in your account. Knowing exactly what it is you want from forex is a big step towards getting it.....unless what you want is infinite profits. That cannot be achieved. Thanks for your posts and contributions to FF, and I appreciate you sharing your MM with all of us.
  • #55
  • Jan 23, 2009 10:11am Jan 23, 2009 10:11am
well you hit the nail on the head

you are hoping to get "the handsome sum" before you blow the accounts

my philosophy is this: the tax man will take 1/3 of whatever you make this year.... so you better try to make as much as you can.....

there are years where my mechanical strategy would have turned 10K into 1 mil in 12 months....

then there are years where 500K was reached, and it went down to 100K....

so it goes like this..... you can have a predetermined level (100K might be reasonable) then start over and have 10 chances to do it again with house money....

just remember the tax man..... it will be up to the trader to pick their own appetite for risk
  • #56
  • Jan 29, 2009 9:23am Jan 29, 2009 9:23am
Quoting tdion
real fast for giraia

here's how to do it

say the account is 10K

say the max DD is 1000 pips

the size per lot for EURUSD is 10,000/1000/10 or 1.0 lots

the size per lot for USDCHF is 10,000/1000/8 or 1.25

so on and so forth

how do you know you are right? multiply the lots X the $per lot X the pips, and it will give you your bank account size



leon... i do the same thing myself. i wait until my account is up 50% and then i drop my divisor substantially.... riskier w/ house money is the only way to protect initial...

many thanks for answer.

do you think stick with 2% or 4% of the last high will have much diferent from it? Because in the end the max DD will be guestimation.

and a question about Leon question. I think you said that negative RR is not good with this MM and that the trades should have 3 or 5 times profits than the loses. With negative RR the only way i can see to recover is using a martingale. No?


thanks again.
  • #57
  • Feb 1, 2009 10:31am Feb 1, 2009 10:31am
Hello again.

I will share the final component of the strategy. What I have presented to this point is excellent (IMHO) but still lacks protection.

I suppose if you have money to burn, you can risk aggressively from the opening bell. But if your risk capital is burned up, you are likely toast.

So here's what I've come up with.

For me, every trade has a 40 pip stoploss. So with an 800 pip divisor, I can handle a losing streak equal to 20 losses in a row. Of course, there could be some winners in there, but if the net is -800 pips at any one time, I will bankrupt.

To combat this, I will use an 800 pip divisor ONLY AFTER MY ACCOUNT IS UP 20%. If I am below 120% of my starting capital, I use a 4000 pip divisor, which is the equivalent of 200 losing trades in a row.

This is to protect investment capital. If I have house money, I bet aggressively and hope for a winning streak. If I have no house money, I am extremely conservative to protect my bankroll.

This component account for survivability, which was not included in the original idea.
  • #58
  • Feb 3, 2009 8:56pm Feb 3, 2009 8:56pm
[quote=tdion;
say the account is 10K
say the max DD is 1000 pips
the size per lot for EURUSD is 10,000/1000/10 or 1.0 lots
the size per lot for USDCHF is 10,000/1000/8 or 1.25
so on and so forth ...............[/quote]

is the basic similar to Larry Williams ??

account balance * (risk percent) / largest loss = contract to trade
  • #59
  • Feb 3, 2009 11:02pm Feb 3, 2009 11:02pm
um.... not really.

there is nothing to do with a largest loss or a % risk in this money management.
  • #60
  • Mar 1, 2009 11:43pm Mar 1, 2009 11:43pm
Post 57 has one flaw in the logic.... it requires you to win many times early in the year.

You could be positive in pips, and breakeven (or worse) at the end of the year. This is because your wagers are small before you hit 20% profit, and large thereafter. It may take you 10 wins to get to 20%, and 3 losses could throw you back to where you started.

There is a better way.

I leave it to you to ponder.
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