Lads, maths help needed on account wipeout

B

Black Swan

I saw the sums a while back but can't find them; if you risked 2% account per trade and kept adjusting it down, how many losses in a series would you need to be wiped out, 250? If you had 1:2 failure rate (losing as much as you gained) how many would it take to clean you out, 600?

TIA for anyone who could do a quick back of fag packet calc. doesnt have to be that precise..
 
zeno's paradox, you would never be wiped out (if by adjusting down you mean risking 2% of the new lower account balance and if by wipe out you mean the account going to zero)
 
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cr6196 said:
zeno's paradox, you would never be wiped out (if by adjusting down you mean risking 2% of the new lower account balance and if by wipe out you mean the account going to zero)
Click to expand...

Got ya, but let's say we were spread betting with a nominal 10 grand account and couldn't go below a 50p a pip..so we'd start of with 200 quid risk per trade..Or if we did it in stages and said right if I lose a grand it'll be 180 quid a trade, if that continues and you end up with 6 grand it'd be 120 quid risk per trade..how many trades in a series would it take?
 
After 250 trades your 10,000 account would be 66.69 according to my calculations. The amount you could risk per trade would be 1.33 so game over really.

How much would you say is the minimum you could risk per trade?
 
China Diapers said:
After 250 trades your 10,000 account would be 66.69 according to my calculations. The amount you could risk per trade would be 1.33 so game over really.

How much would you say is the minimum you could risk per trade?
Click to expand...

It's not for me its an 'essay' I'm working on..for someone else..Thanks for the calc. so you'd need a series of 250 losing trades before wiping out a ten grand account? Ta.. :)
 
Well as cr6196 said, the account never gets to zero so you will never really get wiped out. It depends at what size you decide the account is too small to trade.

After 250 trades the account will be 66.69, but for me the account would have been too small to trade practically some time before that, I just used 250 trades as you mentioned it.

Somebody chip in if I'm talking out my ass.

https://spreadsheets0.google.com/sp...RKEYKj2iWZi6Q&authkey=CNDumMQO&hl=en_GB#gid=0
 
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You could live a little longer with SLM at 10p min, although their percentage margins are higher than some (or most, come to think of it).
 
Black Swan said:
It's not for me its an 'essay' I'm working on..for someone else..Thanks for the calc. so you'd need a series of 250 losing trades before wiping out a ten grand account? Ta.. :)
Click to expand...

Do your own homework.

Why aren't we friends yet? :|
 
well look for any answer thats useful u need 2 do this urself bcos there are 2 many variables. and if u cant do this urself then u are a RIGHT PLONKER
 
DashRiprock said:
well look for any answer thats useful u need 2 do this urself bcos there are 2 many variables. and if u cant do this urself then u are a RIGHT PLONKER
Click to expand...

If it's for some essay you'll just need to put your figure and then explain your reasoning how you came to that figure. It's all you can do. Aren't you going to run out of margin before £60 depending on market traded (oh no, another variable) unless you move to a tiddler account?

I think you'll need to also define exactly what a loss is and isn't- stop loss = hit and not just 'trade 1 in trade sequence closed in red, exit and resized for trade 2 in trade sequence i.e. total loss of risk capital rather than temporary loss of some risk capital. Sky is the limit with that one. I'm all for pushing everything away from the 'all in', 'all out' positive r:r every time kind of punting that all the coin flip theory stuff pushes.

I'm talking out my 'arris, it's turning into a book rather than an essay.
 
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Basically, here's the formula you're looking at:

E = S x (1-r)^n

Where E is the "ruin" level of your account below which you can no longer trade, S is the starting account value, r is the risk (ie. 0.02) and n is the number of consecutive losses.

So basically you're solving for n where E/S=(1-0.02)^n
 
Black Swan said:
It's not for me its an 'essay' I'm working on..for someone else..Thanks for the calc. so you'd need a series of 250 losing trades before wiping out a ten grand account? Ta.. :)
Click to expand...

An essay. That sounds like School Essay to me. 10 grand sounds like the full extent of the account balance a novice would have. Spread Betting, is not something that a serious traders wastes time with, IMO.

I think in short order that I'm starting to understand some things that were once unclear to me.

Spread Betting. That explains a lot.
 
JourneyFX said:
An essay. That sounds like School Essay to me. 10 grand sounds like the full extent of the account balance a novice would have. Spread Betting, is not something that a serious traders wastes time with, IMO.

I think in short order that I'm starting to understand some things that were once unclear to me.

Spread Betting. That explains a lot.
Click to expand...

Wonder why this guy got banned so quickly :|
 
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