Mira wrote:MightyOne wrote:
Position sizing (how fast) & money management (how much) is more important than the chart itself;
the best chart interpreter in the world will fail without these things where as the worst will succeed.
You're right MO, i need to work some more on this.
I think about it all the time but I still have many questions.
"How fast" is one of these.
If I'm adding fast I'm making more but my space is decreasing dramatically, so I can switch to a bigger tf and double it.
Would you suggest to cut size in a specific "place" in the progression? Or when my sl is too tight to absorb the actual idea?
Thank you very much!
Position sizing is the number of pips that equals a specific amount of money.
Are you making...
$10 every 2 pips, 3, 6, 12, 24, or 48? How fast are you making money?
The speed at which you are making money is the distance between lines.
Now let's say that your initial size was $10 every 3 pips and you increased your size to $50 every 3.
To move from H1 to H4 you must halve your size so that you are making $50 every 6 pips.
To move from H4 to D1 you must halve your size so that you are making $50 every 12 pips.
Because half of the margin was returned to you, as you moved to the next largest period, you can increase your size to $100 every 12 pips ($50, $60, $80, $100) without consuming more margin.
There are many ways to make $50/12, you could divide it into three trades: $15/12 + $15/12 + $20/12
You can move them down to a lower period: $15/6 + $15/6 + $20/6 (same number of lines, but half as wide).
You can move one up to a higher period so that you can focus more on the others: $20/6 ---> $20/24 --->$30/24 (maybe you don't need as many lines)
You could split it like this: $15/12 + $15/12 and take the rest off the table...
If your stop is too tight then you can move up the periods, to enjoy the wider lines, or you can reduce your size to give yourself more space:
$50/12 & 1.25 lines remain:
(5/4)1.25 = 1.56 lines
(5/3)1.25 = 2.08 lines
(5/2)1.25 = 3.12 lines
(5/1)1.25 = 6.25 lines
So $20/12 & 3 lines or two trades of $10/12 & 3 or $30/24 & 2 should revive your space.
If you have size or space then you always have options.