trendie
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As an alternative to ODTs thread about trading with size, I offer my own simplistic attempt as a starting point for other ideas.
Firstly, it is anathema to me to add to a losing trade, learnt from experience and at great expense.
If a loss occurs because of poor entry, or random loss, trading bigger to recover may make sense. However, if a loss is a symptom of changing market condition or volatility, ploughing in with increasing size is short cut to a blown account.
Also, as size increases, what you end up doing is trying to break even, at increasing cost. At some point, you are risking exponentially, but anticipating a fixed break even. The aggregate risk:reward is increasing madness.
For example, if you have a 50/50 possibility, and you double on a loss, each trade increases risk of loss, but your nett return remains same. At the point you are risking 16x (aggregate loss 31x), your nett return on a win is still 1x. If somebody offered you a risk:reward for 31:1 straight off, you'd turn it down.
Anyway, I am rambling.
If you had an account of 100x, you trade normal 1%, or 1x, then with a nett positive edge, wait for your account to become 130x.
Once you have gained 30x, you can interpret this as: 10 trades at 2x and 10 trades at 1x.
What this means is, you can leverage your gains, and have "bought" yoursefl 20 FREE trades before dropping to where you started.
At this point, you can trade 2x. You can afford 10 losses at 2x (20x).
Then, drop back to 1x, and can afford 10 losses at 1x.
(total 30x).
After the account is growing at 2x, if total gains result in 160x, you can scale up again.
You can now afford 30 consecutive losses before dropping to your starting point.
You can trade at 3x for 10 trades (30x), another 10 trades at 2x(20x) and 10 trades at 1x.
You would need to lose 30 consecutive trades to get back to break-even.
I am using 10 trades as a generic idea. If you system allows for 15 consecutive losses before alarm bells ring, then alter the maths to account for it.
Dont scale up too soon, otherwise you run the risk of bouncing between different levels. EG, dont scale up every 3 trades, as random spread of losses and wins undermines the point of the scaling.
The next step would be to trade 3x until you gain another 40x. (about 14 nett winning trades).
You now have 100x, ie, doubled the account.
You now have the buffer, ie, "bought" yoursefl 40 consecutive losses to break even.
(10 trades at 4x (40x), 10 at 3x (30x), 10 at 2x(20x) and 10 at 1x(10x), total 100x)
But, here on, you are trading 4x after doubling the account.
I offer this as a starting point for aggressive account growth.
The principle being;
NOT to add to losses;
to leverage your existing gains to accelerate the account;
using the specifics of your own win/loss ratio to determine the scale up size (ie, how many trades needed to drop back a size)
add only when winning
scale back when losing
conserve your initial capital.
have a great bank holiday weekend.
Firstly, it is anathema to me to add to a losing trade, learnt from experience and at great expense.
If a loss occurs because of poor entry, or random loss, trading bigger to recover may make sense. However, if a loss is a symptom of changing market condition or volatility, ploughing in with increasing size is short cut to a blown account.
Also, as size increases, what you end up doing is trying to break even, at increasing cost. At some point, you are risking exponentially, but anticipating a fixed break even. The aggregate risk:reward is increasing madness.
For example, if you have a 50/50 possibility, and you double on a loss, each trade increases risk of loss, but your nett return remains same. At the point you are risking 16x (aggregate loss 31x), your nett return on a win is still 1x. If somebody offered you a risk:reward for 31:1 straight off, you'd turn it down.
Anyway, I am rambling.
If you had an account of 100x, you trade normal 1%, or 1x, then with a nett positive edge, wait for your account to become 130x.
Once you have gained 30x, you can interpret this as: 10 trades at 2x and 10 trades at 1x.
What this means is, you can leverage your gains, and have "bought" yoursefl 20 FREE trades before dropping to where you started.
At this point, you can trade 2x. You can afford 10 losses at 2x (20x).
Then, drop back to 1x, and can afford 10 losses at 1x.
(total 30x).
After the account is growing at 2x, if total gains result in 160x, you can scale up again.
You can now afford 30 consecutive losses before dropping to your starting point.
You can trade at 3x for 10 trades (30x), another 10 trades at 2x(20x) and 10 trades at 1x.
You would need to lose 30 consecutive trades to get back to break-even.
I am using 10 trades as a generic idea. If you system allows for 15 consecutive losses before alarm bells ring, then alter the maths to account for it.
Dont scale up too soon, otherwise you run the risk of bouncing between different levels. EG, dont scale up every 3 trades, as random spread of losses and wins undermines the point of the scaling.
The next step would be to trade 3x until you gain another 40x. (about 14 nett winning trades).
You now have 100x, ie, doubled the account.
You now have the buffer, ie, "bought" yoursefl 40 consecutive losses to break even.
(10 trades at 4x (40x), 10 at 3x (30x), 10 at 2x(20x) and 10 at 1x(10x), total 100x)
But, here on, you are trading 4x after doubling the account.
I offer this as a starting point for aggressive account growth.
The principle being;
NOT to add to losses;
to leverage your existing gains to accelerate the account;
using the specifics of your own win/loss ratio to determine the scale up size (ie, how many trades needed to drop back a size)
add only when winning
scale back when losing
conserve your initial capital.
have a great bank holiday weekend.
Last edited:
