thread: Money management - What is the secret?

Hello all traders,
For a very long time people told me that money management is fondamental, I concur, but frequently is very hard discover and understand the rationale.
Is it feasible to convert a shedding egy into a winning egy thanks to the money management?
I want to try and give an example:
10 trade = 4 winner 6 loser, with R1: 1...
That is a losing egy because you can see!
Some maths:
Assuming that each trade price us 10 euro and the total money to risk is 100 euro we will have 80 euro( 4 winning trade * 10) and -60(losing trade)
What happen if I alter the sum to risk for each place?
1 trade (LOSE) bet =9.9 euro
2 trade (WIN) bet =13.2 total =103.3
3 trade(Lose ) bet = 9.9
4 trade (Win) bet = 14.15 total = 107.54
5 trade(win) bet = 9.43
6 trade(Lose ) bet =3.77
7 trade(WIN) bet =7.54 totale =120 euro... 20% ROI with 4 winner trades and 6 loser trades while at the classical money management we'll lose.
8 trade
9 exchange
10 exchange

http://gyazo.com/6ca34e879c647f747f3693d67dcd3625

That isn't Martingale!

OK, now I wish to say sorry because I know my english is very very bad and it'll be not easy for you understand what I wanna say...
WE JUST NEED TO KNOW WHAT IS OUR r:r AND% OF WINNING TRADES AND WE CAN kNOw BEFORE WHAT WILL BE OUR ROI.
We just care that 4 trades /10 is going to be winner.
Some state:
Every trade has to to be consecutives, we need to understand if every trade win or lose before to compute the next lot size, I used this egy from the gambling world and it's work, at the FX you need to add disperse, commission, and the margin.
Until now I spoke using the term money to risk, before to apply the egy you will require some money extra just for the margin, thus if the sum to risk is 100 euro, you will need at least other 200 euro for the margin but to not risk.

If there are enough people interested to this,within the next step will be explained how to calculate every bet.

Another examples
Cash to risk =100
trades =30
winning trade: 3
R:R 1: 6
ROI = 1.34
generally a risk 5 pips to earn 30 pips. . .and with just 3 trades I earn 34%.

I don't understand what you're going on about above but...

Risk management is simple.

Limit your losses and make the most of your winning trades.

Do not attempt to think of it with respect to X:X, each trade differs.

Create a guideline and stick to it, for example, I use 1% of cumulative equity risk per transaction. You will need to normalize your risk profile each trade so you're consistent.

I don't know what you're going on about above but... Risk management is straightforward. Restrict your losses and make the most of your transactions. Don't try to think of it each trade is different. Create a rule and stick with it, for instance, I use 1% of equity risk per transaction. You will need to normalize your risk profile each trade so you are consistent.

Tell me please your shedding egy, R,% winning trade and losing trade... I want try to set a winning money management!

Cb92 is spot on IMHO. Look for longer, to maintain your transactions if the pair is trending strongly, and the underlying causes of the tendency stay in place. There's no strict mathematical formula (e.g. R:R ratio, trailing stop distance) to trade management that will work optimally all the time, because every situation is different.

Likewise, there is no money management formula that, in itself, can offer an advantage (mathematical evidence here). The best you can do is to maintain your posture sizes small (don't overleverage yourself) and consistent (because you don't want one loss wiping out the $$ obtained by various wins) to secure your capital, like Cb92 says.

Hi Gurudeva,

I believe you understand the significant of money management, trade management and risk management for successful forex trading in very long term. Two thread can be read by you under, there are good for money management, transaction management and risk management. 1 thread with only 7 percent wining rate but he can make a ot of money.

https://www.cliqforex.com/trading-sy...-scalping.html

https://www.cliqforex.com/trading-sy...d-gbp-jpy.html

I really don't think that it would be possible to create your losing egy a winner even when you utilized prooper money management, because your risk to reward is impartial,
but if you change your risk to reward too, you should be able to do it, you ought to have atleast 2:1 but depending on just how much a looser your egy is, then possibly more than 2:1 is required, you want to compute that according to your win ratio.

quote Yes, of course not all the losing egy could be winner! But as I mentioned in 1 post from the example, a egy's results can enhance more and . It's not for the losing egy, although I made an example of the way in which a egy can become a winner egy.

Yes I agree, it's the risk to reward that's the secret here, if you flip a coin 1000 times you'd, even when you used mm come up brakeven using a 50% win ratio,
I assume your egy doesn't have a 50% win ratio, and that means you want more than 1 , thats fairly simple, if you want to find out how much you need, then it isn't so tough to find out assuming you have backtested your system and understand your win ratio.

quote Just man!

You can definitely improve, but 30 trades is not sufficient to learn your win ratio since it's changing a lot and it isn't significant, when you start to come near 1000 trades, not till then will it start to even out and remain around it is true worth (winratio) ofcourse that is a lot of trades, it'd be difficult to make them that would have quite a while, thats why you want to generate an EA of your egy and rear test it.

Hi all traders, For a long time people told me that cash management is fondamental, I concur, but frequently is quite difficult discover and comprehend why. Is it possible to convert a losing egy thanks to the cash management to a winning egy? I want to try to give an illustration: 10 commerce = 4 winner 6 failure, with R1: 1... That is a losing egy because you can see! Some maths: Assuming that every trade price us 10 euro and the total cash to risk is 100 euro we'll have 80 euro( 4 winning commerce * 10) and -60(losing trade) What...

You have found hot water!

And hot water isn't a soup...

Modern fighters don't think like that. The trick isn't to risk 5pips to receive 30 but vice versa. . .the only thing you suggested properly is small account - 100eur and okay risk of 10 percent which should be higher, at least 25%/commerce.

You don't give the algorithm to know the next bet. I might be wrong but in the examples you provide it seems to me that you anticipate some type of reversion of your sequence. You bet less If you win too often based on your stats. When you get too many losers you bet more anticipating the win/rate to return to its mean. That is called gambler's fallacy.

What if you get a series of losers?