Quote:
Originally Posted by kaalilaatikko
But now I am facing the question how to weigh the trade sizes against each other, when several systems are in use at a time. Dale has stated that none of his positions exceeds 1.875% margin of the total capital. This is a decent rule. But do you folks use this kind of a rule as a lower limit as well opening each trade with about the maximum margin? I have been thinking to use the potential maximum loss as another factor in counting position sizes. This would mean that longer-term systems, i.e. VS and DMS would be used with smaller position sizes than the shorter-term ones. In addition, those pairs that have higher volatility would be reduced in trade size. Does anybody apply these kind of money management rules, or how do you balance your trades? chirules54 presented his method in post #83 for weighing the pairs within one system, and I wonder if somebody has invented something like that for concurrently used systems.
J. |
hello kaalilaatikko,
Rgerading the money management issue you mention I have been uisng a combination of the following:-
1, I set a position size so that if it goes against me and hits my stop (sometimes not easy to estimate as some of wilders systems do not have a stop), I only lose 1% of my account balance. You could change this % to suit your own risk appetite. At Oanda, one of my brokers, they have a variable lot system so I can fine tune my lot size here.
2, Set a position size so that it uses a certain % of my margin, as Dale has been doing with 1.8%. Personally I have been leaning to a figure of 0.75 - 1% of margin used per trade at the moment. This gives me a chance to open 1 or 2 positions on the same instrument if required (sometimes on teh RTS).
3. On systems where there are no real set in stone STOPS,, I will guesstimate a position size based on ATR x 3.. Similar to the Volatility system.
Hope this helps in some way.
Cheers
Boca