Thread: A clever money management system wanted

Originally Posted by ;

my Guidance on MM Would Be to KISS. I have studied and developed MM egies. Not just creating my own things, but also studying the best books available on the subject and putting the theories into practice. I began trading using the easy%R strategy, and I wound up doing a substantial 1 year study ring that brought me right back to %R. and %R is where I have stayed ever since. I am not saying use%R and be satisfied, by all means you should do your research. It's a healthy travel to take. But in the long run, you will likely end up trading%R

if you would like to become serious about MM, here is a list of books you should think about studying, in the order they should be read to construct your base....

1. Trade Your Way to Financial Freedom by Van K. Tharp
2. Elementary Probability by Edward O. Thorp
3. Quantitive Trading and Money Management by Fred Gehm
4. The Mathematics of Money Management by Ralph Vince

Just finished reading
1. Trade Your Way to Financial Freedom by Van K. Tharp .

Is there any book out there that is better than this one to lay a sound foundation for trading?

Try to browse The Disciplined Trader and Trading in the zone by Mark Douglas, I read them both and I think they are a must read for a newbie trader.
Also look for the other 3 books from the post.

Originally Posted by ;

Everyone is talking about how important the cash management is, but nevertheless there is only threads about EMA5 crossing EMA13 and so on with 30 pips cease and 60 pips limit.

I figure there needs to be much more about money management than some stop loss, limit order, trailing stop, trade per 1 percent of your account.

So please discuss some smart ideas for my money management, thanks.

It sounds as if you are thinking that SL has something to do with MM
When designing a system that the one thing important is getting something that makes money.
(besides that it matches your personality etc)
If that means a 1 pip SL or a 1000 pip SL is of no importance.
If it takes 1 lot or 50 lots is of no importance either.
Once the system is prepared the MM part starts.
MM *never* has even the slightest influence in your ceases or when you start or shut transactions.
Just on the dimensions of your transactions.
If you take 2 traders that both use the exact same system and MM method the size of the transactions is closely associated with their own account size.
Trader 1 may wind up trading 1 mini lot and trader 2 ends trading up 10 full lots.
But they exchange precisely the exact same system parameters.




BTW when you wrote Money Management I presume you mean Cash and Risk Management.Without RM your account will probably get killed just like it gets killed without MM

Originally Posted by ;

my Guidance on MM Would Be to KISS. I've studied and developed MM egies extensively. Not just creating my own things, but also reading the best books out there on the subject and putting the concepts into practice. I started trading using the simple%R strategy, and I wound up doing a substantial 1 year research circle that brought me back to percent R. and percent R is where I've remained ever since. I am not saying use%R and be fulfilled, by all means you ought to do your research. It is a healthy travel to take. But in the end, you will probably wind up trading%

Yes,%R (fixed fractional) is simple and effective. It means that absolute dollar amount risked decreases with the account balance, and therefore allows profits to be compounded exponentially; while risk is kept constant, percentage-wise.

The objective of MM (standing size) has to be to conserve capital, permitting a positive expectancy strategy to prevail.

Merlin, I hope that you have reached the same conclusion I have, specifically that no matter what MM method we use, it does not affect expectancy.
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Originally Posted by ;

So please discuss some smart suggestions for my cash management, thanks.

IMHO there is no clever system of MM.
______________________________________

Originally Posted by ;

It sounds like you're thinking that SL has something to do with MM
When designing a system that the one thing important is getting something that makes money.
(moreover that it fits your character etc)
if this implies a 1 pip SL or a 1000 pip SL isn't of any importance.
If it takes 1 lot or 50 lots isn't of any importance either.
Once the system is prepared the MM part starts.
MM *never* has the smallest influence on your ceases or whenever you open or shut transactions.
Just on the size of your transactions.

Exactly! The best post I've read on MM.

David

Auslanco's egy page 1


Money Management Trading habits:
Maximum 2% risk per pair. What that means is if you calculate your stop losses your stop loss amount has to be within 2% of your account .If the trade goes against you, the maximum you may loose is just 2% of your account. This way it also stops you from getting panic attacks when the trade retrace from you leading you shut the commerce pre maturely. If your preferred stop losses don't come in just 2% of your account do not take that trade. Like I always say, you may overlook 1 commerce but there are millions more to come.
You always have to calculate your risk every time before you input your transactions.
Your risk to profit ratio has to be minimal 1:1. That means if you're taking a 2% risk on a commerce be certain that your profit goal would be at least 2%.
Consistently have realistic goals. My aim is 300% capital growth per year. The lesser your goal will be lesser the risk of losing your money. Even in the event that you've got 50% capital increase per year you're doing better than 90% of the worlds largest hedge funds.
More transactions you take the longer you expose your account for reductions. No trader in this world can profit from every single market movement.
Plays a big part in trading. Take the transactions only as long as you're at least 90% convinced of profiting from it. If you are not sure stay away in the commerce. Remaining on the sideline is equally like winning.
Never trade against the trend. Notably with a high volatile pair such as GBP/JPY. It may give you few winning trades. Nonetheless, it's likely to get you in the long term.
Always have a trading egy... create a habit to adhere to it doesn't matter how desperate you're. Always trust your egy although not bloomberg or any announcement from citibank. Do not proceed with your gut feeling because 95 percent of the time that your gut feeling is wrong.
Your charts are your Foreign Exchange bible. Everything what you have to learn about Foreign Exchange is in your charts. You may find something new everyday in the charts.
Specialize in a couple of pairs. Each and every pair has it's unique attributes. No two pairs are exactly the same. Do not trade all of the pairs that your broker can offer. Should you specialize in a couple of pairs very soon you will be able to read the pair just like a road map.
Stay away from your ranging markets. There'll be enough of fashion break outs on this pair than you ever want. Why take any additional risks hoping to pursue 20 pips on a ranging markets when you're able to grab 200 pips on a break out.
As Monarc said traders are a greedy lot. Less covetous once would be the most successful after.
Do not try to pursue every single pip or market movement. Take a realistic weekly or monthly goal for a percentage of your account. Perhaps not the amount of pips. If you have already achieved that goal stay away from the market. Like I mentioned previously. . The further you trade there's more risk of losing your money.
The losses are part of this game. Don't try and cover all your prior losses from your next trade. First your trading strategy has to include at least 50% of losing transactions. Then you can cut down on the amount of losing trades though you gain expertise and confidence.
When you start you must demo trade at least for your initial 3 months to build a trading egy. Then for another 3 months trade on a demo account or a micro account and examine your egy coupled with a good money management egy. Whenever you're fully confident then trade with your real account.
Use minimal account leverage. Do not abuse it. My recommendation for new traders is maximum one miniature lot for each $2500 or one full lot for each $25000.
At last... remember there's not any easy way to become a good consistently profitable trader. Nobody can become a profitable trader immediately. Like every thing else in life it takes time, patience lots of learning and sacrifices. Do not be afraid of mistakes.
It took me 8 months to create my first constant $100 per week. Ever since that time making money is like a walk in the park.

Originally Posted by ;

Auslanco's egy page 1

Money Management Trading habits:
Maximum 2 percent risk per pair.

Your risk to profit ratio has to be minimum 1:1. That means if you are carrying a 2 percent risk on a trade be sure your profit goal would be at least 2%.
Always have realistic goals.

More trades you take the more you expose your account for losses. No trader in this world can profit from each and every market move.

Plays a big part in trading. Simply take the trades only if you are at least 90% convinced of profiting from it. If you aren't sure stay away in the trade. Staying on the sideline is equally as good as winning.


Constantly have a trading egy... create a habit to stick to it doesn#8217;t matter how desperate you are. Always trust your egy although not bloomberg or any announcement from citibank.


Your charts are the forex bible. Everything what you have to learn about forex is on your charts. You may learn something new everyday from you charts.
Specialize in one or two pairs. Every single pair has it#8217;s very own attributes. No two pairs are the same. Don#8217;t exchange all the pairs your broker can provide. Should you specialize in one or two pairs very soon you'll be able to browse the pair like a road map.

Stay away from your ranging markets.

Don#8217;t even attempt to pursue each and every pip or market motion.

The more you exchange there's much more risk of losing your money.

Remember there is no simple way to turn into a good consistently profitable trader. Nobody can become a profitable trader immediately. Like every thing else in life it takes time, patience lots of learning and sacrifices. Don#8217;t be afraid of mistakes.

Quite good.

I would just add: use 1% rather, there is no rush. 2 percent for me is a lot to digest.

Don't have more than 5 percent complete risk open at any one stage (that is currently 5 pairs at 1%!!!!!) .

Additionally - if you move your stop to break even your vulnerability drops back to 0.

You can now create a new entry using 1% if you would like. But do you want to?
Do you have a motive?

Fixed %. There is a thread about it in the newcomer thread because the original poster complained there were not any threads about it.

Just seemed.
Truly there are at least 2. Very hard to find, they're both tacky first posts in the newcomer section

Sticky mega-intro https://forexintuitive.com/forex-tra...ing-diary.html and https://forexintuitive.com/discussio...discovery.html PeterFM's. Seriously, if that has not been read yet, I suggest reading it. .

There must be a Fiji post buried somewhere.

I am looking fo EA which manage money management that will control my guide trade as follow:-

(a) If I set it to 5 percent, the EA will block/denied any order (single order) in the account that exceed 5 percent of the of the equities.

(b) As an example auctions balance is 10,000 usd, the EA will block/denied any order that use over 500usd and will allow only order that is under than 500usd.

Most of the timeI can follow this rules, but after a while I thend to violate this principles.


Can there be any EA you certainly can do so or is there any proposal.


Thank You

ARIS

Originally Posted by ;

Auslanco's egy page 1

Money Management Trading habits:
....
Take the transactions only if you are at least 90% sure of profiting from it.
....

How can you calculate that?
David

Originally Posted by ;

How do you compute this?
David

Purhaps we ought to invite Auslanco for comments.

My view on this is about Gut feeling, it is not a calcualtion. Basically once you start your charts and look at your plan it will provide you one of 3 calls - long, short and no signal. The gut feeling is how confident are you from the system's results.

90% are, my plan says long and it seldom lets me also I've looked at FF and the majority of the others agree with me and there are not any Fundimentals due out now that may upset.

10% are, I'm the only one going long on a new system as well as the news says brief.

Build your plan, expect it and use this website for reference.

Hope your on demo, if so you will learn the 90% sense quite soon, and you will find out about the 10 percent - why did I do this feeling quite soon too.

Joyful trading

Originally Posted by ;

....My view on this is about Gut feeling, it isn't a calcualtion. Basically when you start your charts and look over your strategy it will give you one of 3 calls - long, short and no sign. The gut feeling is how confident are you from the system's outcomes....

Thank you for your reply.

I didn't understand it was possible to enter a trade with whatever like 90% certainty (hence the after my remark ). Would be interesting to get some of the 1KT guys' views on this.

With a system that offered anything like a 90% success rate, we could compound leveraged gains (using a simple fixed fractional MM approach) to put $1,000 into several million in only a couple years!!

Let's drink to that!

David