Hello, guys,
I just recently got familiar with Mr. Williams money Management strategy, and I believe, it is amassing. It says this:
(Current capital X %Risk)/Largest loss = Number of contracts per trade.
That means, if you have 50 000 capital and choose 20% risk
(50 000 X 20%)=10 000
and if you choose your largest loss (the place where to put the stop) is 2000, then you can trade
10 000/ 2 000= 5 contracts per trade.
And when you get in profit, you have to increase the number of contracts, but when you get loss, you decrease it.
Now I have few questions about it, which I cannot figure out:
1.Those 5 contracts are 5 open positions, right?
2. Do I open whole 5 at same time?
3. If "Yes", than what happens, when one of my positions got stopped out or turns into profit and I close it? Do I open new one, or have to wait till the next trade?
4. The percent of margin I go in every trade does stay stable, or decreases/increases depending on how profitable I'm and how many positions should I open?
Those are for now! I'll be really glad to hear your opinion!
Thank you!
I just recently got familiar with Mr. Williams money Management strategy, and I believe, it is amassing. It says this:
(Current capital X %Risk)/Largest loss = Number of contracts per trade.
That means, if you have 50 000 capital and choose 20% risk
(50 000 X 20%)=10 000
and if you choose your largest loss (the place where to put the stop) is 2000, then you can trade
10 000/ 2 000= 5 contracts per trade.
And when you get in profit, you have to increase the number of contracts, but when you get loss, you decrease it.
Now I have few questions about it, which I cannot figure out:
1.Those 5 contracts are 5 open positions, right?
2. Do I open whole 5 at same time?
3. If "Yes", than what happens, when one of my positions got stopped out or turns into profit and I close it? Do I open new one, or have to wait till the next trade?
4. The percent of margin I go in every trade does stay stable, or decreases/increases depending on how profitable I'm and how many positions should I open?
Those are for now! I'll be really glad to hear your opinion!
Thank you!