Mira wrote:Thanks MO, i got it!
We are losing nothing (if losing is losing a x% of space) and we are gaining everything
But can i do it with money only?
I mean:
+2$, +2$, [double, sl = -2$] + 4$, [double, sl = -4$] +8$
(In this case i'm cutting my space by a 50%)
1 = a risk that is a constant
2 = a reward that is a constant
Increasing the position size brings the reward to you:
[1]----------------------------------------------------------------[2]
[1]--------------------------------[2]
[1]----------------[2]
[1]--------[2]
[1]----[2]
There are pros and cons to every decision.
If you double your size then you lose space more quickly but whatever is left is greatly multiplied; if you
doubled twice and lost all but 5 pips then halving twice would result in 20 pips of wiggle room.
The risk is that if, for whatever reason, you must exit for an amount that is greater than your stop then you are going
to lose 20 pips for every 5.
If you double with a risk-box of 30 pips then you are left with a risk-box of 15, but if you were to only reduce your space by a quarter
then you would have 7.5 more pips to move around in; 10 total, at a size of 3, after (4/3)7.5
Best case scenario is that, after reducing your risk-box to 15, that you give back 10 and are left with (6/3)5 or 10 pips to move around in at a size of 3.
You are moving in the same direction whether you go 3, 4, 5, 6, 8, 10, 13, 22 or 3, 6, 12, 24 and you will end at the same cap.
There is a short-term benefit to aggression, but in the long run running and walking are pretty much the same.
It is easy to comprehend, you are basically placing and trailing a stop loss.
If you are running out of room then make more, revert to a smaller size.
The more you work with space the more you feel In control, the more you feel in control the more confident you become, &
the more confident you become the better the decisions that you will make.