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Re: Risk of ruin, amount per trade formula?



PureBytes Links

Trading Reference Links

If your thinking of the "optimal f", it was given in "The Mathematics of
Money Management" by Ralph Vince.  If your local library doesn't have it,
you can probably get it on interlibrary loan.  The presentation is a bit
daunting.
Lionel Issen
lissen@xxxxxxxxx
----- Original Message -----
From: Mike Campbell <ug@xxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>; <quotes-plus@xxxxxxxxxxx>
Sent: Tuesday, June 27, 2000 12:07 PM
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