Best Money Management for this mechanical system? | Forex Factory

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Best Money Management for this mechanical system?

  • #1
  • First Post: Jun 8, 2016 6:19am Jun 8, 2016 6:19am
Hi all,

I have backtested a mechanical trading system since 2006 till now. This is a 1:1 RR system that has generated 3065 winners versus 2739 losers during the period (53% win ratio). I'm currently forward testing it on demo (see trade explorer attached) with good results.

However, backtest shows that there are some difficult months although all years have more winners then losers, save for one year slightly below break even.

Obviously, the money management applied impact strongly the equity curve of the system. I would be happy to have your view on what would be the best money management for it. I will post screenshots of the monthly details.

Cheers.
  • #2
  • Jun 8, 2016 6:33am Jun 8, 2016 6:33am
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  • #3
  • Jun 8, 2016 9:36pm Jun 8, 2016 9:36pm
Quoting Fbird
Hi all, I have backtested a mechanical trading system since 2006 till now. This is a 1:1 RR system that has generated 3065 winners versus 2739 losers during the period (53% win ratio). I'm currently forward testing it on demo (see trade explorer attached) with good results. However, backtest shows that there are some difficult months although all years have more winners then losers, save for one year slightly below break even. Obviously, the money management applied impact strongly the equity curve of the system. I would be happy to have your view...
Can't comment until the system is known.
Without having an understanding of down, you can never appreciate up.
  • #4
  • Jun 9, 2016 6:01am Jun 9, 2016 6:01am
​Well, this is a 1:1 RR system and you got the monthly breakdown of winners/losers. Don't need the system to give your opinión on MM. However, I will make it available to contributing members.

Thanks for your participation though.
  • #5
  • Jun 9, 2016 6:20am Jun 9, 2016 6:20am
Hello Fbird,

I think I'm testing a mechanical system that's almost the same as yours if I see the figures.

I should take a progressing lot size in function of result. (Is not so aggressive as a full martingale)
Start Lot 0.01 (In function of available account money)
Winner -0.01
Looser +0.01

In a ranging market the odds are a little bit worser and lotsize is building up slowly, sooner or later a breakout will occur and then profits will be made.

You don't have 53% win rate but only 52,81%! This can make a huge difference.

Because of the small win advantage, spreads needs to be small in function of profit/Loss (the same in your case)

Winning percentage must be at least (Profit + Spread) / (2 * Profit)
Example: 50 pip profit (hint) and 3.0 pip spread => Win rate must exceeds 53% to be profitable at long term

Grtz,

Tom
  • #6
  • Last Post: Jun 10, 2016 4:09am Jun 10, 2016 4:09am
Thanks for your comment Tom.

In fact, the system already include a soft martingale scheme and spread are not significant in comparison with profit/loss per trade (2 pips spread vs 100 pips).

My doubt are more related to the best MM to be applied.
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