How to size up capital appropriately?

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

  1. Say the trading winning percentage is 70%.
    Every win is about 10-15%.
    Every lost about 5-10%.

    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"?
    krugman25 likes this.
  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).

  5. 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.
  8. Robert Morse

    Robert Morse Sponsor

    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.
    birdman likes this.
  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
    tomorton likes this.