Larry Williams Money Management strategy... again!

Discussion in 'Trading' started by Petar, May 30, 2012.

  1. Petar

    Petar

    Hello, guys,
    I just recently got familiar with Mr. Williams money Management strategy, and I believe, it is amassing. It says this:

    (Current capital X %Risk)/Largest loss = Number of contracts per trade.

    That means, if you have 50 000 capital and choose 20% risk

    (50 000 X 20%)=10 000

    and if you choose your largest loss (the place where to put the stop) is 2000, then you can trade

    10 000/ 2 000= 5 contracts per trade.

    And when you get in profit, you have to increase the number of contracts, but when you get loss, you decrease it.

    Now I have few questions about it, which I cannot figure out:

    1.Those 5 contracts are 5 open positions, right?

    2. Do I open whole 5 at same time?

    3. If "Yes", than what happens, when one of my positions got stopped out or turns into profit and I close it? Do I open new one, or have to wait till the next trade?

    4. The percent of margin I go in every trade does stay stable, or decreases/increases depending on how profitable I'm and how many positions should I open?

    Those are for now! I'll be really glad to hear your opinion!

    Thank you!