[dpaterso]

Hello,

Nice to hear from you (and thanks for the compliment).

I still 'like' my 'Enron System' but it has one severe 'psychological drawback': you can very easily sit with losing positions for a VERY long time. Now whether or not this is WORSE than realising a loss I'm not sure. I'm starting to suspect that it IS worse i.e. if you realise a loss it's 'gone and forgotten' after a while whereas the losing 'Enron' positions 'stare you in the face' on a daily basis!!! Of course: once you DO close out an 'Enron' position at profit then the 'negative' is IMMEDIATELY forgotten!!! Just something to think about!!!

Now further to my previous posts here is yet another 'method':

I created an 'indicator' that simply gives me the MAXIMUM difference in pips / points between the OPEN and the CLOSE for the entire number of bars being displayed on any given chart or timeframe. It would be better to use the MAXIMUM difference in pips / points between the HIGH and the LOW for the entire number of bars being displayed on any given chart or timeframe BUT at GCI (because of data errors) this is not possible (although it should not be a problem at Delta because Delta 'cleans' their charts if a data error occurs).

Now using similar logic as detailed in my previous posts (I'm not going to repeat the money management 'stuff'):

The biggest difference between the OPEN and the CLOSE on EUR/USD since 2007-08-16 (GCI's daily chart only goes back this far) is 0.0322 pips or $322. Dividing our total capital requirement of $3627 by $322 gives me a 'factor' of 11.

For the Dow (Futures) then: the MAXIMUM difference in points between the OPEN and the CLOSE for the same period is 1061 points or $1061. Therefore the total capital requirement is $11671 (factor of 11 x $1061).

For the Bovespa Index: the MAXIMUM difference in pips / points between the OPEN and the CLOSE for the same period is 5051 points or $2526 (5051 x $0.50). Therefore the total capital requirement is $27786 (factor of 11 x $2526).

This is even more conservative (by the looks of things) than using the ATR.

It once again proves two things:

1 - Be CAREFUL which instruments you trade

and

2 - I SHOULD NOT BE TRADING THE BOVESPA (at this stage on that account anyway)!!!

You know what I don't get:

Last year I had a HELL of a time as you all know. Now aside from the fact that I did not have our trading systems and could not SPELL 'money management' correctly let alone APPLY money mangement rules: NONE of this was EVER explained ANYWHERE!!! EVEN IF I applied some form of money mangement rules as they are given from time to time on the 'new traders' thread I'd STILL have run into a problem which is now evident from the above. In other words: EVEN IF you were using some of those money mangement rules that stipulated that you never risk more than a certain percentage of your capital on a single trade you'd STILL have a problem i.e. if you did not take into account the particulars of the instrument being traded (like the Bovespa Index for example) you'd STILL 'wipe out'. Why??? Because if you used THOSE money management rules you'd ALWAYS get stopped out on the Bovespa no matter what. In other words: EVEN ALTHOUGH you WERE INDEED following money management rules your capital would STILL 'slowly but surely' get 'eaten away' on each and every single trade.

I NOW understand COMPLETELY for the first time why I've heard of people who traded the Dow for YEARS and made nice profits. Then they've moved to the DAX (for example) and 'wiped out' (this ASIDE from the fact that the movements on the DAX are in EUR and converted to USD on the charts).

Interesting. Very interesting!!! NEVER a 'dull moment' in THIS business!!!

I suppose to 'summarise' (unless someone else comes up with a better idea):

This should be factored in to your money management rules:

Take the ATR of an instrument, get the equivalent $ value of the ATR, multiply THAT by a factor of between 11 and 14 (10 and 15???), and the result is what you need in capital to be trading a single lot of that instrument to be 'safe' and avoid a potential 'wipe out' (margin call)!!! AND THIS IS DIFFERENT BY THE WAY from Wilder's CSI i.e. the CSI is giving you 'the best bang for buck' instrument to be trading. What it's NOT telling you is IF you should be trading that instrument, given the amount of capital that you have in your account, or not!!! There is a very 'subtle' difference there!!!

Regards,

Dale (forexbrokersonline.net).