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Mike
We used the Vince book. Seems to work for us. We discovered that we were
running a 100% risk of ruin. We modified our methodology and went to a 0%
risk of ruin. You wouldn't think there would be that big a difference
between investing 50% of your capital and 33%, but our account balances have
proven it out. :)
Guy
Paranoia...you only have to be right once to make it all worthwhile!
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Mike Campbell
Sent: Tuesday, June 27, 2000 10:07 AM
To: metastock@xxxxxxxxxxxxx; quotes-plus@xxxxxxxxxxx
Subject: Risk of ruin, amount per trade formula?
Some time ago I saw a formula that spit out the amount of capital (as
a percentage) that you should devote to any given trade based on the
number of wins, number of losses, average dollars made per win, and
average dollars lost per loss.
The theory being that if you devoted LESS than this per trade, you
were not making as much as you could, and if you devoted MORE than
this per trade, your risk/reward ratio went up (increased risk of
ruin).
Anyone have this formula handy? I'm trying to comparea couple
different systems to each other and while this formula may or may not
be what I use to determine how much to put into a trade, it seems
useful for comparison purposes.
Thanks in advance,
Mike
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