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	Forums ›› Technically Speaking ›› Strategy Trading ›› How to never get an account wiped out?

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gg12

Registered: Jul 2003
Posts: 754

01-09-07 09:47 PM

Independent of your strategy money management is most critical to a successful trader.

What about designing a structure which only works on percentages?

Once a loss occurs the account is for example at 50%. After the next loss it's 25% (then 12.5% ....). But never 0.

If there is a winning streak the account will scale up nicely.

As long there is an edge during the livetime of the account (which is theoretically endless) the account will grow anyway.

What do you think?

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damon_achey

Registered: Mar 2005
Posts: 159

01-09-07 09:53 PM

You're describing the Anti-Martingale betting strategy. Here's some reading for you.

http://en.wikipedia.org/wiki/Betting_strategies

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monee

Registered: Jul 2001
Posts: 432

01-09-07 10:24 PM

Quote from damon_achey:

You're describing the Anti-Martingale betting strategy. Here's some reading for you.

http://en.wikipedia.org/wiki/Betting_strategies

The section under gamblers ruin in wikededia is applicable to one of the things to do for profitable trading.

Especially the part that starts with " A casino generally has: "

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JSL_Capital

Registered: Jan 2006
Posts: 337

01-09-07 10:34 PM

Keep your account size small. Take the profit out on a regular basis & enjoy yourself!

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RoughTrader

Registered: May 2006
Posts: 625

01-09-07 11:17 PM

Quote from gg12:

Independent of your strategy money management is most critical to a successful trader.

What about designing a structure which only works on percentages?

Once a loss occurs the account is for example at 50%. After the next loss it's 25% (then 12.5% ....). But never 0.

If there is a winning streak the account will scale up nicely.

As long there is an edge during the livetime of the account (which is theoretically endless) the account will grow anyway.

What do you think?

Have a look at fixed-fractional MM.

RoughTrader

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nazzdack

Registered: Jul 2004
Posts: 6505

01-10-07 01:03 AM

You shouldn't have to lose half of your money to realize that you're in a bad trade(s).

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