High % Risk and Compunding

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Old Feb 14, 2011, 8:07pm   #1
 
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High % Risk and Compunding

Anyone tried using or uses high % risk?

I will be taking 20% of account to use for high risk with the aim of compunding (I may as well put my signature to use).

My account has 100:1 leverage and if I have worked it out correctly then to get a margin call at the point my SL is hit is given by:

SL/(100 + SL) SL = stop loss in pips.

So with a 25pip SL the most I can risk is 20%, with SL = 100pips it would be 50%, but using SL = 25pips, 100pip gain is 80% account and 50% acount growth with 100 pip SL.

Kelly's number gives the % to risk for optimal growth if you know the probabilities of win, loss, or breakeven:

Fraction to bet F = (R*W-L)/R(W+L)

average growth per trade y = [(1+FR)^W]*[(1-f)^L]

Account growth after N trades = y^N

R = Reward (as in 1:3 etc)
W = probability of win
L = probability of loss

Alternatively if you are going to risk a certain fraction, its easy to calculate the minimum W needed.

So if your W = 55%, L=45% then for R = 1, F = 10% and average trade makes 1.005 gain.
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Old Feb 14, 2011, 8:15pm   #2
 
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Re: High % Risk and Compunding

Why are people so reluctant to actually learn how to trade?

...all these magic formulas...
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Thanks! The following members like this post: meanreversion , amit1986 , Pazienza
Old Feb 14, 2011, 8:43pm   #3
Joined Feb 2011
Re: High % Risk and Compunding

Quote:
Originally Posted by Scotty2Cues View Post
Anyone tried using or uses high % risk?

I will be taking 20% of account to use for high risk with the aim of compunding (I may as well put my signature to use).

My account has 100:1 leverage and if I have worked it out correctly then to get a margin call at the point my SL is hit is given by:

SL/(100 + SL) SL = stop loss in pips.

So with a 25pip SL the most I can risk is 20%, with SL = 100pips it would be 50%, but using SL = 25pips, 100pip gain is 80% account and 50% acount growth with 100 pip SL.

Kelly's number gives the % to risk for optimal growth if you know the probabilities of win, loss, or breakeven:

Fraction to bet F = (R*W-L)/R(W+L)

average growth per trade y = [(1+FR)^W]*[(1-f)^L]

Account growth after N trades = y^N

R = Reward (as in 1:3 etc)
W = probability of win
L = probability of loss

Alternatively if you are going to risk a certain fraction, its easy to calculate the minimum W needed.

So if your W = 55%, L=45% then for R = 1, F = 10% and average trade makes 1.005 gain.

Good luck...I think at these levels of risk...ruin is immanent.....

This is coming from me who posted this thread......

http://www.trade2win.com/boards/firs...managment.html

Check it out.......ps what techniques & styles do you intend to use?
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Old Feb 14, 2011, 9:23pm   #4
 
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Re: High % Risk and Compunding

Scotty2Cues started this thread
Quote:
Originally Posted by SpiritBeing View Post
Good luck...I think at these levels of risk...ruin is immanent.....

This is coming from me who posted this thread......

http://www.trade2win.com/boards/firs...managment.html

Check it out.......ps what techniques & styles do you intend to use?
Thanks. Only looking for a few high probability setups a month using S&R on 4hr (sometimes 1hr) TFs and basic fundamentals/market sentiment, no technical indicators
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Old Feb 14, 2011, 9:23pm   #5
 
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Re: High % Risk and Compunding

lol, 25 pips=20% of account. Good luck with that
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Old Feb 14, 2011, 9:26pm   #6
 
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Re: High % Risk and Compunding

Scotty2Cues started this thread
Quote:
Originally Posted by Masquerade View Post
lol, 25 pips=20% of account. Good luck with that
its 4% of my total account though
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Old Feb 14, 2011, 9:46pm   #7
 
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Re: High % Risk and Compunding

But 20% of the part of the account you've apportioned for it. So what's your point?
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Old Feb 14, 2011, 10:17pm   #8
 
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Re: High % Risk and Compunding

Scotty2Cues started this thread
Quote:
Originally Posted by Masquerade View Post
But 20% of the part of the account you've apportioned for it. So what's your point?
Obviously the whole account grows as the 20% part grows, but the % risk on the whole account will also grow. I suppose its like starting off with a little risk then increasing the risk as you get more of the casinos money. Say the high risk part doubles, then 25% of that equals 8.3% of the whole account.
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Old Feb 14, 2011, 10:38pm   #9
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Re: High % Risk and Compunding

Quote:
Originally Posted by Scotty2Cues View Post
its 4% of my total account though
4% per trade is still rather meaty IMO
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Old Feb 14, 2011, 11:43pm   #10
Joined Sep 2010
Re: High % Risk and Compunding

Quote:
Originally Posted by Scotty2Cues View Post
Anyone tried using or uses high % risk?
I will be taking 20% of account to use for high risk with the aim of compunding (I may as well put my signature to use).
My account has 100:1 leverage and if I have worked it out correctly then to get a margin call at the point my SL is hit is given by:
SL/(100 + SL) SL = stop loss in pips.
So with a 25pip SL the most I can risk is 20%, with SL = 100pips it would be 50%, but using SL = 25pips, 100pip gain is 80% account and 50% acount growth with 100 pip SL.

.
The best of British luck to you. I hope that it trades well for you. We are all cheering you on. Go team.

Keep us up to date on your progress with this trading style.






(I give it less than a week before it is a busted account).
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