thepark wrote:Hi MO
Trying to understand your money management technique as mine is egregiously bad but having a difficult time understanding:evil: Possible for a run through of this table from the basics?
So the above table you presented works as follows:
a) You enter a trade with a set percentage loss based on a set minimum size and a set pip box and you can lose 14 times with this percentage loss.
b) If you manage to make 21.53% you jump to the next box size??
c) What happens after you double your position, if it hits your trailing stop at midpoint the size of the loss depends on where you entered, even though you think of your initial stop loss as the entry. How is that loss going to the same for each of the 14 losses?
I am currently trading the GBPJPY, targeting the weekly crash zone. I set my stop loss at 5% of my account and I back out my entry size based on my entry distance to the 2 day extreme and 5% loss. When I start winning then I start adding to my lot size. The size of my win and loss are both around 5%. This means that if I win one week and lose the next week I make nothing. All I am trading is "body in the direction of profit, wick in the direction of loss" and I am correct a lot of the time direction wise (made 86% last year, and 55% the previous year), but I just can't make a lot of money dollar wise...
a) For the purpose of adding size your total risk-box is in play, but this does not mean that you simply set a stop and let price fall 40 pips.
The main idea of Space is surviving long enough to take down big %gains.
After a loss you reduce size and add pips to your risk-box so that you can survive without digging in your pockets for more change.
If your risk-box starts to fill up with pips then you increase size and take pips out of the box to NORMALIZE RISK and achieve the objective more
b) When you make it to +21.153% then the risk-box is still 41 pips. The size of the risk-box changes based on what the $min should be vs what the $min is;
if the "unreal" dollar size is $3.67/pip then you might only have the ability to place a trade for $3 or $4/pip. If $4 then your risk-box is (3.67 / 4)41 or 37.6 pips. If $3.60 then 41.8 space & if $3.70 then 40.6 space.
c) No matter how many times you double your position size risk is the same because it is normalized each time by cutting the space in half.
$1 over 100 = $100
$2 over 50 = $100
$4 over 25 = $100
$8 over 12.5 = $100
But you should be making pips so it will not fall to a single pip of space
This does not mean that you have to make pips to add size.
The only real danger is losing pips past your stop loss as each "big pip" is worth 8 "small pips".
But, as I said before, you are not simply going to let price fall all the way back to your stop loss without reducing
size to preserve space.
As for the rest...
MightyOne wrote:More risk is more risk & more profit is more profit!