Welcome to NexusFi: the best trading community on the planet, with over 150,000 members Sign Up Now for Free
Genuine reviews from real traders, not fake reviews from stealth vendors
Quality education from leading professional traders
We are a friendly, helpful, and positive community
We do not tolerate rude behavior, trolling, or vendors advertising in posts
We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community. It's free for basic access, or support us by becoming an Elite Member -- see if you qualify for a discount below.
-- Big Mike, Site Administrator
(If you already have an account, login at the top of the page)
Good money/risk management is of paramount importance to a successful trading career and Van K.Tharp's "Definitive Guide to Position Sizing" is a great resource.
It is a fairly expensive book, but the information is well worth the price in my humble opinion.
I searched the forum for any threads on this book but found none so I hope this is not redundant.
Now that we have the stage set lets see where we can go with the concept and practice of good money management.
Happy trading....
Can you help answer these questions from other members on NexusFi?
Position sizing is just one part of the equation. You also have to factor in Risk / Reward and your Edge.
Without a definable Edge, position sizing isn’t much of a factor.
Using the “% risk model” shown above at least you will never lose all your capital if you have the discipline to follow your plan. (It would take 70 losing trades in a row to loses ½ your capital and then you might want to re-evaluate your methodology)
"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
Generally speaking the the most profitable systems are of a trend following nature so obviously we are not using a scalping or other short TF day trading method to discuss this.
I use a compounding fractional method trading the FX since the broker I use has entries in units instead of lots, or fractions of lots, so in that respect the compounding is very precise.
Trading futures would require a less precise position sizing method.
It is not always the case. Try to manage confidently 50 lots position for some slight drawdown and you will see how every pip fluctuate your mental state..
