Listen to JimmyJam, he REALLY knows you know

romik · Jan 1, 2008

Quote from Icarus5:

All of the money management modelling is done on a scalping system, which is perfect for an assymetric approach to growing your capital, because virtually every trading day of the year will yield you some profits (ref the thread on getting 10 Pips a day - $100 - to see what I mean by that statment).

Ten Pips a Day, Everyday

From the thread you will see that there are obviously people who believe that because they haven't figured out how to do that, no one else can.

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For position trading you would have to increase the risk side of the equation and the reward side of the equation in a way which is consistent with your unique style of trading. The important thing to remember is to size up in an assymetric fashion, the simplest way to explain this is to give an example:

1 contract = $4,000 in the account
2 contracts = $12,000 in the account
3 contracts = $24,000 in the account
4 contracts = $48,000 in the account
Etc.

(this is just an example using the YM e-mini contract, as I do not know your specific style of trading ... but nor do I need to discuss the concept, once you get it, it works on everything).

This forces you to earn your way (something I firmly believe in) ... and assuming you have everything else in place as a trader, by the time you are position or swing trading 10 contracts with an mean average of 100 YM points per trade for each trade lasting a period of approximately 2 to 4 days you are making a substantial amount of money with substantially less risk than was posed to your account when you were trading just 1 YM contract.

And when a trade or two goes against you, simply scale down your size as determined by your lower account size.

This is how traders scale up in size while decreasing their risk, it requires more time in the initial phases of trading, but perpares you for greater and more long lasting success once you really got yourself in gear.
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The ideal trading model is one of course, that encapsulates more than one method/style of trading/instrument (ie, scalp financial e-mini's while position trading notes and energies, etc.) This diversifies your risk and negates the effect of one sector moving against you. However you do not want or need to become too diversified, as this also spreads your rewards too thin as well.

Good trading,

I
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Jimmy Jam's lost soul will haunt this site for many years to come.

<img src=http://www.bc.edu/bc_org/avp/cas/fnart/art/19th/belgian/wiertz_burial.jpg>

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Listen to JimmyJam, he REALLY knows you know

romik