I’m about to share with you a money management trading system. This does not alert you when to buy or sell but it does reduces your trading time to the bearest minimum. For Example ,
If you own a $10,000 account, you should expect not higher than 20% drawdown on bad months, but Twice as much on good months.
If you own a $100,000 account, you should expect not higher than 17% drawdown on bad months, but Twice as much on good months.
If you own a $1,000,000,000 account, you should expect not higher than 11% drawdown on bad months, but Twice as much on good months.
I’ll illustrate here with a virtual account of $10,000 what I mean.
PS. The basc idea is trade less often. For me, I trade 4 times in a month but execute 18 trades during those time.
Please download Alpari UK Platform and hey in the below user credentials.
You all think so? I guess time will tell! there’s no point arguing over what is not my intention.
for everyone else who read the first post, all I practice is patience and my possible best not to overtrade because the 2 keyword “patience and overtrading” will bleed your account even if you have the best trading system in the world!.
here’s a way this type of trading works. (acct details on post#1)
You place 4 trades with sl 40 and tp 250 (each)
the pair I trade is eurjpy, gbpjpy, gbpusd, gbpchf
a pip on alpary platform on these pairs are from $0.88 - $0.90
Assuming all our trade this week (4 trades) got stoped out trading on 4x leverage
Calculation Below:
$0.88*40 = $35.2 (for 40pips and 1mini traded on 1 pair)
$35.2 * 4mini = -$140.8(1pair
$140.8*4pairs = -563.2 (loss for the week)
But Assuming all our trades hit tp!
$0.88250 = $220 (on 1 pair and 1mini)
$2204mini lots = $880
$880*4pairs = $3520 profit for the week!
the good thing is all our trades might not hit tp but a single win covers more than 4 losses!.
Yes playing money management odds on multiple trades, and also reducing our trade drastically to avoid overtrading (1 trade Per week on 4 different pairs) plus the term “Diversification”
I made an update on # of days to trade. This way of trading enforces stict Money Management but the good thing is we now have an extra day to keep us busy (weew, trading is truly a lonely Business). This new way of trading, our account does not exceed 8% drawdown in a month regardless of its size… (this requires strict discipline)!
remember our last calculation?
in a week, there’s a probability to earn $3560 Profit based on our 10k capital; but with this new way of trading, there’s even a higher probability to earn $4628 and still keeping drawown at 8% every month!..
calculation time… :)… I’ll post that on next post…
unfortunately, our trades did not work ou as planned, this bleeded our account with no higher than -460usd, for a first time loss this month! We now have a maximum DD of 3.83% but we’re still positive on our monthly earning! 13% Profit till date. Let’s watch how next week turns out to be. … thanks for reading through.
of course it does if you’re a large trader or maybe an institutional trader.
large traders or investors cannot stand a loss of [B]-20% [/B] drawdown on account equity! So as amount grows, lot size reduces.
recently i updated the money management to allow a maximum of -9% drawdown regardless of the account equity!.
so whatever the amount is, our equity must not exceed a maximum drawdown of -9% if our month is negative.
Trading starts in few hours time… let’s see how london open goes…
Our account has achieved a total of 33.7 since 13th of this month till date, we earned 19.97% today risking less than 4% of our equity!.
Our next trade should come up on wednesday or thursday! I need a one day break each week to stay far-- very FAR from the market!.. and possibly go outing…
Also, on our trades today, you should noticed i closed a trade at -$78…
the reason for my action is, a minute later i discovered my reasons for entering the trade was wrong so i had no choice but to close at a small loss than wait until price hit my stops!..
Strategy is just 10% of your overal performance. SELF discipline is what makes you a success.
I should engage in riskier behavior when I have less to lose? If its not a good idea to risk a certain percentage of a large account, the same applies for a small one. Large and small account sizes are subjective, and thus not a measure for logical decision making.
Makes complete sense to me. I can stand to lose 1000 bucks, so I might take a riskier, yet overall profitable strategy to increase my bankroll quickly. If I am wrong, then well… I can easily replace that 1000 bucks and try again.
I can’t say the same with 100k.
But tell ya what. Once you get your account to 1 million. You just tell me if you’re risking the same amount or less.
