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Phil wrote:
>
> Lately I have got a lot of mail from a company named Rumery &
> Lehman. They have some kind of money management tool using the Fixed Ratio
> management formula. It is used to increase profits in any system.
> Does anyone think it is worth what they are asking for it $1200?
I know nothing about R+L's fixed ration money management but on
the
surface it sounds like something I've read about.
Curtis Arnold talks about Fixed Fractional money management in his
book. It's simply the idea that rather than a portfolio with a fixed
number of contracts, say one corn and one bond, you adjust the number of
contracts you trade according to market volatility and your current
account balance. Say you're going to risk 2% of a 50,000 account (1000)
on each trade. Take your expected entry minus your stoploss point and
you have approx. (nominal) risk per contract, R. 1000/R = number of
contracts to trade this time.
He states that the advantages of this are: 1. equally weights
contracts
of different size/volatility; 2. allows gradual increase in trading size
as account grows; 3. adjusts for particular volatility of a given time
period; 4. automatically cuts down your trading if things aren't going
well.
This is probably not new with CA but he does show a dramatic
example of
it's effect. He tested the computerized version of his system. It made
300,000 in ten years using single contracts. It made over 1 million in
5 years using fixed fractional.
Surely for $1200 R+L are providing something more than this,
aren't
they?
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