My money management (advanced)

I mean it in a good way - hope i didn't come accross the wrong way

Well im a relative noob (1yr demo, 6 months live) and i deffinetly think this is the kind of MM i have been trying to put together but couldnt quite get it as right as tdion seems to.
I definitely agree that good traders should put aside an amount into a high risk MM account to try to make "ungodly" compounded returns.

Thanks tdion, for such a quality contribution.

Some things are so blatantly simply, my complicated brain overlooks them. Yes, the money management is okay in it's current form (what I originally described on page 1)

But taking it a step further... suppose I have 25K. I think it makes sense to risk 5K in the account at a time with an aggressive divisor (for example, if the max drawdown is 1000 over a few years, then use 500 as the divisor).... The odds of a 500 pip drawdown in a 12 month period should be lower than 50%.

Now suppose the drawdown exceeds 500 and it wipes out my account. I will put another $5000 in, and trade w/ a divisor of 500 again. I will stop trading when the account makes 100% profit, and then I will be at breakeven. I then can then trade my 500 pip divisor again for maximum profit.

Suppose the 2nd account bankrupts at 500. That is a drawdown of 1000 pips. I will then put in another 5K, and try to recover the 10K lost. The point is, the drawdown would have to go to roughly 2500 to lose everything. But the confidence is in the fact that that max drawdown isn't more than 1000 at a time.

The idea is to last a full 12 months with an extremely low divisor. This is where extreme profits come from. Surviving shitty periods for a hot streak.

Marinate on this for awhile.

Hate to toot my own horn, but this last post of mine is gold. Combine it with the MM described (and ignoring the bit about double the divisor during drawdown) and you have a clear view of how I position my bets.

ru gonna post ur ea tdion?

Consider this a drunk dial. I'm a bit giddy and as such I will share my latest research. It happens to be on this thread.

The original post is very powerful but to make serious cash, is EXTREMELY risky. And decreasing the risk by increasing the divisor really prevents a huge gain from being made.

So the solution is this:

If my maximum stopout is 500, then I will use this divisor X 2 (1000 in this case) on the highest balance until the balance drops below 50% of the highest balance. In which case, the account is traded by the current balance divided by 500.

These calculations are for figuring how much $/pip to trade, so then buy/sell the proper lots based on this figure.

-Dion

PS) As Hanover emphasizes all over FF, no money management will replace a positive expectancy in pips (a winning system) ... this is what I PERSONALLY USE.... I have a set goal for the account to reach, and when it does, I pull all gains out and start over.

My gamble is always to find a cluster of winners in succession. The chart shows 4 such clusters.... I have a set goal, and once the goal is reached, all profit is removed and I start again.

In the "cow dung" regions, there is just as much losing as winning, or worse. The money managment in this thread can not prevent you from losing money, but it can be used to help maximize gains with lower risk.

It's all about being extremely risky with house money, and extremely protective of your own money.

what is this nonsense, why are you using backtest, show some real stuff, please show real statements, make us wet and excited

Damn, Whippersnapper! A lot of defining how YOU trade comes from experimenting, researching, and testing! I simply share my work....

Freakin' young people!

It seems like most systems developers/backtesters look for a nicely upsloping, low-noise equity curve. It's a good goal since it gives less heartburn and is a (theoretical) steady money maker.

But I'd often wondered what a good lottery ticket system would look like and it sounds like OP is exploring it too. For instance you might have $100K to manage and you trade $99K conservatively but decide to put $1K in a risky system with a potentially big payoff say 10:1 or 100:1.

What would such a system look like? What class of systems would multiply your money by 10 or 100 in a year potentially with the understanding you could lose it all?

I find it interesting.