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)
The Web is full of trading strategies. Almost every trading Youtube video is about a trading strategy. However, there is virtually no videos on money management. Sure, there is "don't bet more than n% on a single trade", but even then, I have NEVER seen some sort of support of the said "n" based on back testing.
Since there are quite a few algo traders, as well as those who back test their ideas, has anybody here done any testing of money management techniques. Optimal F, fixed fractional or fixed ratio?
Can you help answer these questions from other members on NexusFi?
There is a good YouTube video on the subject, with results from about 30 experienced traders trying to beat a simple "1 contract traded always" position sizing method.
Self promotion rules prevent me from sharing it here though.
Interesting video, very useful. One thing is missing: Fixed Ratio method. For some reason you seem to have an aversion to it. There is also the Reverse Martingale strategy, where you increase the size after a win and decrease after a loss.
Anyway, given wild difference in the outcome, I think every strategy code should include position sizing part.
Fixed Ratio looks terrific in the book about it. What a lot of people don't realize is that the creator used Fixed Ratio to run up his account very high. But then he blew out his account using Fixed Ratio (source: personal conversation with his broker).
Can you please explain exactly how you define "money management" as opposed to "position sizing?" I just want to be clear on what you are referring to.
Take fixed fractional sizing. Many consider that position sizing, since it tells you how many to trade. But it is also a money management approach, because you risk X% of your account on each trade.
For the sake of terminology we can stick to the term "position sizing". How many contracts to buy/sell. What I was referring to in my comment is that stops and exits are part of a strategy. Position sizing comes on top of that.
For some reason you seem to have an aversion to it. There is also the