Money Management

S

springsnow

Hello all,
I'm trying to improve my money management and have heard
about this elusive ( for me at least) 50/50/301-2MM system,
could someone give me a link to a site explaining this system?
Cheers,
didier
 
Ive noticed one thing about mm -

all us retail dudes talk about 1% 2% 5% etc of capital to risk on a trade, monte carlo etc

all the pro traders ive spoken with (pro = in a bank trading other peoples money) laugh at the idea of mm especially x%. How can you win with such small size they ask. their idea of mm is over or under committed to a market. if their gut is pushing them, they put the whole farm on the position.

does any one trading their own bucks take this approach?
 
well as far as i'm concerned halving my size has helped me ending
a rather long serie of losers buy allowing me to place a larger stop, this is not sky rocket MM but it has shown some concret results. And i'm rather ready to learn some just to see how far
money management can help....
cheers,
didier
any clue anyone concerning this 50/50/30/1-2MM system used
for forex market as far as i know?
 
Fred, please refer to the Theory of Ruin.

In my opinion, limiting your risk on each trade to x% or x$ is nonsense. It depends on how long a series of losing trades can be, according to your system.

Personally, I commit a lot more than 5% capital on each trade. But it doesn't necessarily means I am a completely stupid person.
 
If you have a system that has Positive Expectancy. You then take it to the next steps of checking for Risk of Ruin and setting your position size by using Kelly Value ~ Optimal F in order to maximize your reward and minimize the risk.

Do a search for these topics and you will trade with maximum efficiency. :cool:

BTW... you will even find calculators for these metrics, on the web, if you aren't a systems trader.
 
Quote from ktmexc20:

If you have a system that has Positive Expectancy. You then take it to the next steps of checking for Risk of Ruin and setting your position size by using Kelly Value ~ Optimal F in order to maximize your reward and minimize the risk.

Do a search for these topics and you will trade with maximum efficiency. :cool:

BTW... you will even find calculators for these metrics, on the web, if you aren't a systems trader.
More...

Hey springsnow,

All you need to do is a web search and an ET search for the the 4 things I mentioned above (in bold). Learn it. It's all that you need to know other than proper exit strategies. But, Ralph Vince has some descent books.

http://www.amazon.com/exec/obidos/s...ps-1_stripbooks_4436387_2/002-4711068-9397648
 
Although not a classic in the true sense I think you might find "Trade Your Way To Financial Freedom" interesting, particularly if you a newbie as I am. Author is Van K. Tharp. It is a book on trading, but is not a "recipe" book. He discusses a number of money management approaches and describes them succinctly.
THere are a number of reviews of the book in the Book section of this board. It is classed as a "psychology" book.
 
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