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
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%.
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