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# How to size up capital appropriately?

Discussion in 'Risk Management' started by Jason11111111, Sep 4, 2019.

1. ### Jason11111111

Say the trading winning percentage is 70%.

Starting up betting with \$1000 per trade.

What is a good risk and money management way to increase size to 2k/bet , 3k/bet ,4k and so on?

2. ### Overnight

Don't think of them as "bets"?

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3. ### krugman25

I like to think of them as "steak dinners".

4. ### gaussian

Bets are actually probably the most logical (and honest) way to view them. No one calls buying NQ contracts, holding them for 10 minutes, and selling them investing. Trading and gambling share a lot of terminology (and mathematics!)

OP can refer to the Kelly Criteron for mathematical optimal bet sizing. OP is missing a lot of necessary information (net odds, etc).

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5. ### Jason11111111

Nice info.
What is net odds? Is there good book on this topic & position management?

6. ### Fonz

Here is the Larry Williams formula: (account balance *risk percent) /largest loss = contracts or shares to trade.
The risk % is up to you and should be the reflection of your biggest DD. Just apply this formula to your past 12 months of trading (if you keep good records) and check your new DD. You will find your magic risk % depending on what is an acceptable DD for you.
I believe that thinking loss & drawdown first is the ultimate way of making money. And this is one of the biggest difference between retail and pros: Potential gains (how much can I make) and having an edge (which new technical analysis based system will help me) vs Potential loss and consistency..

7. ### tomorton

Think of your positions as % positions, not \$ positions. So as the account grows with profits, you keep each position size at the same percentage of the account capital.

You only have to make 6% profit per month to double your account in 1 year.

I would say go back to the setup and evaluate what triggered the trade. Assign a value of 1-5 or 1-10 based on which setups have a higher expectation. Do not place any bets (I'm fine with the word) on the ones that have had a lower expectancy or tended to lose money. Place higher bets on the ones with a higher value. See if that helps your bottom line.

9. ### bbpp

You should be able to use 100% of your capital to trade.
Assume you have 20 consecutive loss, each loss is 10%, you will still have 12% of your total capital left.Since you have 70% winning rate,20 consecutive loss is like 1|100000000000 probability.

Last edited: Sep 5, 2019
Nobert likes this.
10. ### bbpp

The worst retail is much worse than pros;
The best retail is much better than pros.
Both because pros do not take high risk.

#10     Sep 5, 2019
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