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Traders,
I know of a bond trader who uses some form of martingale position sizing
nearly every day.
The idea, as I see it, is to first, know your systems stats very well and
second, use those stats to your advantage.
Example: Your system currently has an average losing streak of 4 losing
trades.
Depending on your personal preferences, you could for example, begin to
increase your bet size after 4 losing trades.
You could use your stats another way - for example, lets say your system
shows an historic tendency to have a longer than average winning streak after
a greater than average losing streak. If after 4 losing trades (your systems
average losers in a row) you begin to increase bet size and the losing streak
continues - you then reduce your bet size until you get 2 or 3 winners in a
row - then you increase your bet size into the statisticaly anticipated
winning streak.
This is just to get some juices flowing. I am no statistician. The main
point here is to know your trading results. I recomend creating an extensive
spread sheet which calculates all kinds of goodies about your cumulative
trades. You can come up with many ideas which you might find useful to
know, depending on your trading style, personal phsycology and your system or
method.
Please share some ideas here guys and gals, this is a very important topic.
Best wishes,
KM
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