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  • #61
  • Mar 2, 2009 12:53am Mar 2, 2009 12:53am
Quoting tdion
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.

.
Tdion has no problem with modesty. He has a big problem with making a real trade.
  • #62
  • Mar 2, 2009 12:59am Mar 2, 2009 12:59am
What has motivated you to slandering my name all over the forum saying I have no real trades?

I have made plenty, whether I share them with you or not.

Reported for disrespect, AGAIN.

Quoting tuguntrumpet
Tdion has no problem with modesty. He has a big problem with making a real trade.
  • #63
  • Mar 2, 2009 1:30am Mar 2, 2009 1:30am
Originally Posted by tuguntrumpet http://www.forexfactory.com/images/buttons/viewpost.gif
Tdion has no problem with modesty. He has a big problem with making a real trade.

Stalking and disruptive. Let the mods decide.
  • #64
  • Jul 5, 2010 1:11am Jul 5, 2010 1:11am
Hi Tdion,

I have tried three different ways of MM.

1 %risk in every trade

2 X Equity trade X lots

3 reduce trade size after XX DD is reached

None of them can deal with all market conditions!

The best way is withdraw half when you doubled your account then forget it.
No one wants to be defeated~
  • #65
  • Jul 6, 2010 6:11pm Jul 6, 2010 6:11pm
Okay, so let's say I have $1000. I make one trade and it hits my 30 pip stop loss and reduces my account to $950.

Does this mean that my next trade's lot size will be determined by doing 1000/30/10?
  • #66
  • Jul 31, 2010 9:36pm Jul 31, 2010 9:36pm
No. You need to reread the first few posts.

Quoting lolpie
Okay, so let's say I have $1000. I make one trade and it hits my 30 pip stop loss and reduces my account to $950.

Does this mean that my next trade's lot size will be determined by doing 1000/30/10?
  • #67
  • Jul 31, 2010 9:46pm Jul 31, 2010 9:46pm
Quoting tdion
No. You need to reread the first few posts.


If my first trade hits my SL, then $1000 is my highest balance, right? And since 30 pips is my highest drawdown, I would use that?

If my next trade hits a 40 pip SL, then I'm down 70 pips, so then I would use 1000/70/10?
  • #68
  • Jul 31, 2010 9:59pm Jul 31, 2010 9:59pm
No. You have to know the maximum drawdown you are expecting. So if you think your strategy will draw down no more than 500 pips before recovering, the lot size is:

Highest balance achieved (1000) / 500 / 10

Once the account goes over $1000, then you will recompute (For example, if it goes to $1200, then the new lot size is 1200 / 500 / 10

You only change the lot size after the account reaches a new high. So in the case of you losing your first trade, you use the same lot size again.
  • #69
  • Jul 31, 2010 11:03pm Jul 31, 2010 11:03pm
Quoting tdion
No. You have to know the maximum drawdown you are expecting. So if you think your strategy will draw down no more than 500 pips before recovering, the lot size is:

Highest balance achieved (1000) / 500 / 10

Once the account goes over $1000, then you will recompute (For example, if it goes to $1200, then the new lot size is 1200 / 500 / 10

You only change the lot size after the account reaches a new high. So in the case of you losing your first trade, you use the same lot size again.
In this case, you need to create an EA for your system in order to know your max DD from backtest data.
  • #70
  • Jul 31, 2010 11:13pm Jul 31, 2010 11:13pm
Indeed. And then probably multiply it by a factor of 1.5 or higher to account for a maximum drawdown not encountered yet.
  • #71
  • Jul 31, 2010 11:15pm Jul 31, 2010 11:15pm
Tdion by keeping the same trade size after a loss you reduce the "pips" needed to get the loss back but you also are compounding your losses. if you lose again then the % increases and again.

It makes no sense you're just compounding the problem. If you'e willing to risk higher % to get the lost money back why not just overleverage to begin with...

I don't see why you want to make this business any more riskier than it all ready is

cheer

BTW what is your company gonna be about?
Time hides Nothing
  • #72
  • Jul 31, 2010 11:26pm Jul 31, 2010 11:26pm
Well Cindy, you are entitled to your opinion. I agree with you that fixed fraction (reducing position size after a loss) is a less risky way to manage your capital.

However comma.

If you have confidence that your strategy will not draw down more than X pips, this is a sensible approach. Mathematically speaking, you are correct. By keeping the position size the same after a loss, the percent of your capital risked will increase.

I find that this approach provides me (personally) with an acceptable risk / reward option.

The company does not exist yet, but should provide several forex services. My partner and I are working hard to get our ducks in a row.

Quoting CindyXXXX
Tdion by keeping the same trade size after a loss you reduce the "pips" needed to get the loss back but you also are compounding your losses. if you lose again then the % increases and again.

It makes no sense you're just compounding the problem. If you'e willing to risk higher % to get the lost money back why not just overleverage to begin with...

I don't see why you want to make this business any more riskier than it all ready is

cheer

BTW what is your company gonna be about?
  • #73
  • Edited 11:58pm Jul 31, 2010 11:32pm | Edited 11:58pm
Quoting akukaya
In this case, you need to create an EA for your system in order to know your max DD from backtest data.
If you are capable of doing so then yes, this is the best way to go. I'd say, though, if one isn't able to do this, a number pretty much plucked out of the air would (could) also work out fine; this is all of secondary importance.

The benefits of this method of position sizing, as apposed to a fixed % of capital, are indisputable regardless of how the threshold for dropping down lot sizes is decided. Obviously the threshold needs to allow for a reasonable few losses though, otherwise you would end up (pretty much) trading a fixed % of account.

EDIT: @ Cindy & Tdion: Tdion, I think you could have sold this to Cindy a little better than you tried to in your above post. When one trades a fixed % of capital they are in effect giving away, at least part, of the positive expectancy that their method offers. You are fighting math.

EDIT 2: History tells you that a method has, for example, a 60% chance of hitting a profit target. If the 1st trade hits its risk limit and is closed, do we assume that the next trade has more, less, or the same chance of success shown by history? Surely this one trade has not changed your confidence in the method, and therefore one should show the same level of confidence by trading the same lot size.

This method of money management WILL make the difference between a break-even and a losing strategy or a break even and a (slightly) winning strategy.

Even if one looks to be breaking even, with for example, 10 wins and 10 losses, a trader using a fixed % of capital will see their balance slowly going bye-byes. Play with it.
Living the adventure in my head.
  • #74
  • Jul 31, 2010 11:35pm Jul 31, 2010 11:35pm
Well, one other option is to switch to fixed fraction after the account draws down X %.

Of course, this way the account will never go to zero. But then you will end up hurting profit potential.

To each their own.
  • #75
  • Aug 1, 2010 8:46am Aug 1, 2010 8:46am
Quoting akukaya
In this case, you need to create an EA for your system in order to know your max DD from backtest data.
Gotcha, thanks.
  • #76
  • Aug 1, 2010 10:17am Aug 1, 2010 10:17am
Quoting lolpie
Gotcha, thanks.
I used to put this code into my EA to monitor my maxdrawdown

if(AccountProfit()<maxdrawdown)
{maxdrawdown=AccountProfit();
}

Comment("Max Floating DD",maxdrawdown );

Tdion, for system with high consecutive winners and only 1 consecutive losses, this type of MM may be good.
  • #77
  • Aug 1, 2010 12:58pm Aug 1, 2010 12:58pm
Say tdion, werent you the guy writing this: http://www.forexfactory.com/showthread.php?t=11566
Dunno man with strategies like these i dont see you opening a forex company soon. What happened to the good ol' 2% per trade? Why does everybody dream of winning 1000% per year returns? Instead of dreaming to win 1000% each year, think about what would happen and how would you feel if you would lose every penny that you have in your account. Is it worth it? Go for it then!
  • #78
  • Aug 1, 2010 1:17pm Aug 1, 2010 1:17pm
Well, that was when I was new to Forex. 2006 is when I wrote that thread.

Anyway, nobody has to follow this money management. It is my own work, and I simply shared it.


Also, suppose I am only putting 25% of my account into this riskier MM? The other 75% goes into other investments. So does a huge loss on the account cripple me? Nope.
  • #79
  • Edited Aug 2, 2010 4:23am Aug 1, 2010 4:25pm | Edited Aug 2, 2010 4:23am
Quoting Leonlorenzo
EDIT: @ Cindy & Tdion: Tdion, I think you could have sold this to Cindy a little better than you tried to in your above post. When one trades a fixed % of capital they are in effect giving away, at least part, of the positive expectancy that their method offers. You are fighting math.

.
Point taken Leon but I think (in my opinion) the problem with this is putting weight on "Expentency", meaning you are pretty much concluding that based on past results your method will continue to work at the same win rate or drawdown levels... I think you, Tdion and I both have been around long enough to know this is a dangerous assumption.

But anyhow I agree if you are confident in your method then theres no reason this is such a bad idea.

BTW Tdion - good luck with your Forex Company, I remember when I was new to forex you came accross as such a negative bastard (no disrespect intended) on previous threads (maybe this was just my newbness and expectations being challenged by some cold hard facts, can't remember) ....

But anyway I sense a large stick has been removed from your rectum.

Good luck to you sir.
Time hides Nothing
  • #80
  • Aug 1, 2010 4:54pm Aug 1, 2010 4:54pm
lol

Wow.
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