{quote} Hi Guido, For me depends on protecting in first place the money and trading with a small % of risk. Another aspect is never to use all the account amount to trade. Like your signature says, we never know . Thats why for me 5% is very dangerous. Good hunting
- #66
- Oct 8, 2015 4:21am Oct 8, 2015 4:21am
- Joined Jun 2013 | Status: Membership Rewarded | 3,206 Posts
{quote} Just curious, how much of your account have you used to trade, at any one point of time?
A couple of months , I changed my moneymanagement from 1 full sized order to 2 half sized orders.
every of these orders are about 2-3 % risk .. same reward.. = 1:1
Fixed lot sized for every trade.. eypected 15-35 pips SL or TP ,
During the week ( tuesday to thursday ) , I trade only one ( a half) position normally ..
But fridays.. DAAAMN .. they are my most successful days .. since years!
Fridays I use double portions ( one full size ) and it gave my trading an enormeous boost! so in the end , i trade fridays about 4-6 % each pair / trade .
and it works fine .
Fridays you can find some of these posts from me
http://www.forexfactory.com/showthre...64#post8508264
http://www.forexfactory.com/showthre...25#post8509425
The only thing , what wont work is " position sizing "( Martingale ) .. but I trade retraces / priceaction , normally with the trend ..no kind of Martingale
and it works fine . Everything is allowed in trading .also to rist 5% a trade
Green pips to you
Guido
{quote} say what ?
!
Risiko birgt immer auch die Chance.
Don't want to spam here but I have to say that: best day of the entire f***ing week.
- #75
- Nov 3, 2015 11:59am Nov 3, 2015 11:59am
- Joined Sep 2006 | Status: ... | 8,112 Posts
It's simple math.
If, at any future point, your losses exceed your wins by (say) 10, then if you're risking a consistent 5% equity (fixed frac) per trade, your drawdown is a minimum of
1-(1-.05)^10 = 0.401, i.e. at least 40%. (It's actually worse than that, especially if the total number of trades is large, but that formula gives a rough idea).
It requires (100x40)/(100-40) = 66.7% return on your depleted capital, to recover back to breakeven, from 40% drawdown.
Hence you could look at your historical results over a statistically valid (preferably 1,000 upward, the more the better) number of trades, and establish the worst case peak-to-trough drawdown attained over that period, for different position sizes (1%, 2%, etc). Then allow as much margin for error as you deem necessary, and make your own decision as to what drawdown is personally acceptable to you, both mathematically and psychologically, giving you your desired position size. (If you have a large enough history, you may discover why the textbooks recommend sizing at < 2%).
There are some excellent posts by Jack Larkin earlier in the thread IMHO.
If, at any future point, your losses exceed your wins by (say) 10, then if you're risking a consistent 5% equity (fixed frac) per trade, your drawdown is a minimum of
1-(1-.05)^10 = 0.401, i.e. at least 40%. (It's actually worse than that, especially if the total number of trades is large, but that formula gives a rough idea).
It requires (100x40)/(100-40) = 66.7% return on your depleted capital, to recover back to breakeven, from 40% drawdown.
Hence you could look at your historical results over a statistically valid (preferably 1,000 upward, the more the better) number of trades, and establish the worst case peak-to-trough drawdown attained over that period, for different position sizes (1%, 2%, etc). Then allow as much margin for error as you deem necessary, and make your own decision as to what drawdown is personally acceptable to you, both mathematically and psychologically, giving you your desired position size. (If you have a large enough history, you may discover why the textbooks recommend sizing at < 2%
).There are some excellent posts by Jack Larkin earlier in the thread IMHO.
