|
PureBytes Links
Trading Reference Links
|
Pompatis:
Some years ago when I was just getting started as a trader I read
a lot of simple stuff on money management techniques. I formulated
eight (8) different rules I titled 'money management techniques'.
Oddly, I never implemented any of this information because my
trading direction evolved to mutual funds. Obviously, I was a 'wannabe'
futures trader. Here was my intuitive take on the bet sizing issue from
reading a lot of books on gambling to wit:
7. After each winning trade, or campaign, increase the number of
contracts traded by one. Using this type of Anti-Martingale system
of money management, you are 'pressing' after each win. Your first
loss will be the largest, with the greatest number of contracts, but don't
try to pick a top in the equity pattern of your account.
8. After a losing trade, revert back to trading just one contract. Fol-
lowing this money management system, you are 'backing down' after
each loss. Always let the size of your total equity dictate risk size on
the next position. Never increase the risk size, or contracts, when
your account is in debit. Let the ups and downs of your total equity
tell you the risk size of each new position; which in no event should
exceed 2% thereof. Should you go into a prolonged slump with a
string of losses, break it by switching to Mid-American contracts.
Rememer guys, this is from someone who doesn't even trade
commodities but I thought these ideas looked good on paper.
Now, let's hear from some REAL pros on this issue.
Charles
_______________________________________
-----Original Message-----
From: POMPATIS@xxxxxxx <POMPATIS@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Tuesday, May 25, 1999 8:14 PM
Subject: FUTR: BET SIZE
>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
>
|