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The key is geometric growth enabled by low draw downs
So let me understand what you are saying...with your automated bot system, you just have to reach your $1000.00 per month goal. In other words, you can have a losing day or week, but provided you reach the 1k or better goal at the end of the month you're on course....see attachment if correct.
"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
Your spreadsheet essentially captures it. However it is not measured in months goals. If your delta is set to 1k like in your spreadsheet you would bump from contract to contract every time that 1k delta is exceeded. That could take 1 day it could take 2 months etc. Time is not a factor.
Also notice how as you increase in contracts that the dollar amount you are trading per contract. Under your spreadsheet just for an example take the 10k out to start and just start with 1k. You start with 1k per contract and by the time you hit 24 contracts you are at something like 11k per contract.
The frontend is where you are at highest risk but you are also essentially risking the least money. Once you get up in contracts you have a much larger cushion to protect your gains. This is why I really like fixed ratio. What I do to protect myself on front end is start an account like you with around 10k so it buffers my frontend until geometric growth can take over.
A real key to this is setting your delta correctly based on historical draw downs. If you set it to low you will constantly be going up then back down in contracts. You can also set a rate of decrease that is explained in the book I mentioned that can control when you bump down in contract. I usually set my rate of decrease the same. If my delta is 1k then I move up a contract when met that delta. But if I draw down more than 1k per contract I would bump down a contract. By making sure I don't set my delta to tight it I don't have to bump down more than one contract very often. In fact very rare would have to bump more than 1 contract before getting out of draw down.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
Going to have to read it again. This is certainly a book you want to own though. I have to admit I'm shocked this book is not wider regarded.
My biggest problem though is with his ideas on probability and how he uses it to put down Ralph Vince. It doesn't really make any sense. He clearly has no clue of bayesian stats.
Thanks I will check out the post. As far as Ralph Vince goes I can't really comment as have not used his methods extensively although I am familiar with them. I think every method has strengths and weaknesses and different systems can benefit from different methods.
Fixed ratio is weaker on the front end and strengthens as your account grows. But I overcome that by starting with a higher balance than my delta. I do like the way it protects your capital on the higher end. I can stomach losing a 5k or 10k account more than I could if I grew an account to 300k and lost it. But done right don't even have lose a 5k account.
"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
So let me understand what you are saying...with your automated bot system, you just have to reach your $1000.00 per month goal. In other words, you can have a losing day or week, but provided you reach the 1k or better goal at the end of the month you're on course....see attachment if correct.
"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
