Fixed Ratio Money Management

Discussion in 'Risk Management' started by Pinozi, Oct 11, 2005.

  1. Pinozi


    Hi Traders,

    I'm reading through "Ryan Jones - The Trading Game" and he presents a money management technique called Fixed Ratio Trading. Its a fairly simple formula and seems to help grow small accounts geometrically

    Im trying to find some free software on the net that can simulate the trading but most want actual $$$ for it

    Just wondering if any keen programmers can fix up a quick spreadsheet that can do the same. The formula is pretty basic and I'll post it here if anyone is keen

    Any help is much appreciated


  2. Hi Pinozi,

    I have Ryans book and the actual code (usable code) for using Fixed Ration Money Management for stocks doesnt seem to be present in the book. for example, I have a trading system, what code would I use to set my position in one stock? I have a money management method that is basically the same as the simple math he shows;

    risk * Capital / .25 = $contract to trade

    but it doesnt leverage as his does. It increases as capital rises, but I dont trade 2x shares if I have 20% more cash.
  3. Pinozi, hope this helps.

    "Lite" version. looks like it's free.
  4. Pinozi


    Ive already used the lite version - but it only allows me to input 15 trades

    I want to be able to place my trading history in and see how much more I wouldve made or lost using this system

    I know I could pay for it or do the calculations manually but like a bad hooker Im cheap and lazy


  5. yo, Pinozi. I found, in trading forex, at least, that I had to create my own indicators. as the existing indicators didn't show much.

    prolly is the same for MM techniques. what might work for one may not work for you or your precise method of trading.

    ultimately you may have to work out a MM system that best suits your own needs in order to be most successful. :)


  6. read "Portfolio Manangement Formulas" by Ralph Vince. He lays the groundwork for fixed fractional compounding and then even gives you a spreadsheet layout to do the math.

    it's pretty all-out aggressive and will get you massive drawdowns, which really turned the street off to the whole thing in the early '90's.

    Some people, myself included, have "tamed" and tweaked the methods to ramp up at decreasing rate in order to reduce exposure but still compound.

    I wrote an article about it but never published it...maybe I'll dig it up someday and post a link to it. But you could come up with your own as well.