account management

J

jstormbo

I'm new to ET. Have been following the 'keeping it simple' thread but it's gotten quite long and seems to be getting off track. I've been a poster to that thread but don't feel like I've really contributed anything. Thought I'd start a thread myself that might lead to some productive conversation. One topic is account management. Like many I've gone thru periods of time when I've done really well but have also gone thru times when I've blown more than I would like to admit. Almost a year ago I acknowledged that I needed to incorporate some account managment method into my trading plan to document how many contracts I trade, how to increase my exposure to obtain geometric account growth, how to handle drawdowns etc. Basically how to turn my capital into little employees that will generate a product for me.. $$. Upon a recommendation I used the book by Ryan Jones.. "The Trading Game" as a guideline for my account management plan. He introduces the concept of fixed ratio trading. Is anyone interested in discussing this subject? i.e. account management, not necessarily the one particular method I use although I'm certainly willing to go into details about my account management plan. This may not be as exciting as entry/exit points but I think it's more important to the survival of a trader long term.

Personally, I've traded stocks and options for about 10 years now, became a full time trader about 2 years ago and started trading futures( emini's mainly ES, some NQ) about 18 months ago. Have progressed from a 1 lot trader to up to 12 lot currently.


Stormbo
 
Quote from jstormbo:

This may not be as exciting as entry/exit points but I think it's more important to the survival of a trader long term.
More...

Yes there is most certainly some truth to this assertion... if you haven't done so already, have a look at the work on position sizing by Tharp...
 
I'm currently working through position-sizing methods too, trying to gain some understanding. Hope we can work this through.

There seem to be 5 basic methods as I understand it:
1. Fixed lot size - no sizing method
2. Fixed Fraction of equity
3. Fixed Ratio (Ryan Jones)
4. Percent Risk (Tharp)
5. Percent Volatility (Tharp)

Maybe we could start this thread off by adding any others to this list, then weighing up the pros and cons of each? I have the software to test all of the above, but we would need to agree on a suitable testing method and a portfolio to test on ( I have PinnacleData end-of-day commodities data).

I would be happy to post results once we decide on the above. Available reports are a detailed performance report (text) and equity curve including drawdown (graphic). Perhaps we should restrict the performance report to just pertinent data? Thoughts please.

From my testing to date (which has been somewhat limited) it seems that Fixed Ratio provides the most bang for the buck on smaller accounts, but I have heard comments that do not favor it because it does not take equity into account, only profit. Possibly the method could be modified to accommodate equity in some manner?

Look forward to getting this thread up and running!
 
sorry I just noticed that you had replied to this thread. I thought it was dead. I've been sorta focused on tuff trading lately and hadn't paid too much attention to this but would like to get back to it.
 
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