position sizing on system with high W%

Do you know which type of position sizing is the best, if i have system with high W% cca 90%, and RRR 3:1

i tried fixed fractional, martingale but i think they aren´t very well, i want to find something better what suit me better, some suggestions?

thanks in advane :-)

Well, consider this.

If you know that the likelihood of a trade is a winner, then it's probably better to size your lots smaller. Depending on how often the loser happens, will allows you to at least 'take the hit' and survive to hit another streak of wins.

An alternative is to start 3rd from highest risk, then keep decreasing risk until you hit a loss, then go back to 3rd highest risk.

If I understood correctly, you win 9 from 10 trades and your stoploss is 3 times your takeprofit, in pips.
Well, if these ratios continue you have found the holy grail. Forget about martingale or any fancy system, you can safely risk 6% on every trade as the chance of losing half or your account is smaller than anything you can imagine and you'll be a millionaire in no time, even if you start with 100$.

But only if the probabilities stay the same, which is 99.99% not the case.

with such a high winning ratio and excellent RR does the size of additional add-ons really matter. how much difference it would made, If Your additional position is 4% and not 5%. the point is that Once the initial position is in profit and the system generates more Room space for additional Lots. why not decrese the size as compare to the Initial Lot. Since its already showing profit.

As you already mention fractional. I think this should be the best approach.

I remember there was a note I found regarding the new design of money management, I'm very much new to this forum and don't know if I'm allowed to post external Links, or other filehosting things Link. It would work excellent with such high RR

the people I know personally, including me.. we barely get a chance to trade 2:1 RR. else we have to be satisfied with Just 1:1 approach most of the time.

Would you bother to explain a bit what kind of system you use which gives you such an excellent RR and win%. (man I'm really dying to know) maybe after knowing more about your personality traits.. we can suggest you a more close approch of MM http://cdn.forexfactory.com/images/icons/icon6.gif


thanks and Good Luck.

Thanks mates

Why? Probably i dont understand.

Believe me, you will.
As I don't know your system and how experienced you are I'm almost sure that you based your calculations on some theoretical past performance. The next results will deviate from your expectancy.

I can't understand why anybody with a PF that's several times greater than the world's top (billionaire) traders would be asking advice about position sizing on a public forum.

My dear Watson, they search for new ways of exponentially increasing their profits! We, on the other hand, as clear losers, try to find ways to lose less. It all depends on what you focus yourself on.

Yes you are correct. Sorry for my english, but despite of that i will try to explain it. I am only making system based on simple PA and trendilne, W% cca 90%, and RRR 3:1 are based on playback backtest and one month demo account. And i also know it is a question of time, thah trading results will be worse. I only want to improve my system with better position sizing

If your system is mechanical, let me try coded it to prove the W5 cca 90%.
With RRR 3:1 , if this true, I can alter the system to make it a very profitable with my own method. I am willing to share with you.
Let's share yours: P.M me.

I agree.


IMHO fixed fractional is the best if you understand the math behind it.

Agree 100% with you; I've pretty much tried 'em all (fixed ratio, optimal-f, etc) after reading Ryan Jones' book, but I reached the conclusion that they all ultimately amount to little more than a rebalancing of the return/risk equilibrium. Fixed frac has its flaws (it takes a 25% gain to recover from a 20% loss, for example), but it gives us the opportunity for exponential gains over time, while the dollar loss per trade decreases if/when the account goes into drawdown.

I am not the best at money management but I will take a stab at it:

If you have a system that has 90% winrate with 3:1 RRR then a possibility is to trade the maximum possible leverage each and every trade while subtracting a little bit of leverage due to a few factors.

Lets say your stop loss is 50 pips and your broker has automatic margin call.

Your trading system(90% winrate, 3:1 RRR) fires off an entry signal on EUR/USD. Lets say your broker offers you 100:1 leverage. You have a $10,000 trading account. EUR/USD is trading at 1.2700 so your maximum buying power for EUR/USD is 10,000*100/1.27 = 787,401 or so, lets round down to 7 standard lots. This is 70$ per pip.

In the above scenario if you took the full loss your account would be down 70*50 = $3500. But your position will be forced liquidated before your trade got even got near your 50 pip stop loss.

You make your automatic margin call = 50 pip stop loss or as close as possible given the limitations of standard lot sizes.

If you do the math correctly assuming 100:1 leverage, 50 pip stop system, EUR/USD @ 1.27, $10,000 account your maximum trading size you could put on so the broker does not give you a margin call before your 50 pip stop is hit is approximately 500,000 unit size or 5 standard lots. This means around 25% risk per trade. 5 standard lots is $50 per pip, so assuming you take the full loss your down $2500, so your account is now at $7500. Buying Power for EUR/USD with $7500 is 7,500*100/1.27 is still 590,000 which is above the 5 standard lots position you put on so you would be safe. The real Leverage you would be using would be 50:1.

The above would of course be dependent upon the currency pair, if your broker only gives you 50:1 leverage instead of 100:1, stop size, among many other factors/variables to consider.

Let me end this post by saying that you need to be really , really , really sure that your system has a 90% win rate along with RRR of 3:1. If your trading a system based of trendlines and price action I honestly don't think those systems come anywhere close to the numbers you described. Backtesting is not enough. You need to try the system out with some real money and low risk first to get some statistics first, then after many months of data you can decide whether to jack up the risk per trade.

But I cannot stress enough that a 90% winrate system with RRR of 3:1 is truly rare and extraordinary. You need to factor in what happens if you get unlucky and your first trade of your account is a loser or if the first two trades happen to be losers. I would suggest you think deeply about why your system is truly capable of those numbers and the many potential problems you would encounter with real account.

I would never advocate anyone risking 25% of their account on one trade unless they have tested the system live for many months with low risk first, truly understood with every fiber of their being what made their system so remarkable, unique and genius like, and had all of their emotional/psychological problems worked out.

Hey petertrader

Can you put up some time describing the system you are using. I'm sure Lot of fellow Traders would be interested in knowing about such system.. including me.


Thanks in advance.

http://www.stator-afm.com/fixed-frac...on-sizing.html

http://www.stator-afm.com/monte-carlo-analysis.html

HTH