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Here's a more extreme version of the example Chuck LeBeau presented in
his traderclub bulletin. Let's flip a coin 10 times with 5 winners and 5
losers. You either win or lose the amount you bet. Should break even,
right? Not if you use the fixed fractional method. We'll start with $100
and bet 25% (similar to optimal_f for some systems) of our account on
each flip.
Bet Trade Balance
start $100.00
$25.00 lose $75.00
$18.75 lose $56.25
$14.06 lose $42.19
$10.55 lose $31.64
$7.91 lose $23.73
$5.93 win $29.66
$7.42 win $37.08
$9.27 win $46.35
$11.59 win $57.94
$14.48 win $72.42
Bet Trade Balance
start $100.00
$25.00 win $125.00
$31.25 win $156.25
$39.06 win $195.31
$48.83 win $244.14
$61.04 win $305.18
$76.29 lose $228.88
$57.22 lose $171.66
$42.92 lose $128.75
$32.19 lose $96.56
$24.14 lose $72.42
Bet Trade Balance
start $100.00
$25.00 win $125.00
$31.25 lose $93.75
$23.44 win $117.19
$29.30 lose $87.89
$21.97 win $109.86
$27.47 lose $82.40
$20.60 win $103.00
$25.75 lose $77.25
$19.31 win $96.56
$24.14 lose $72.42
Our money management turned a breakeven system into a loser.
--
Dennis
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