Money Management

Nov 4, 2004
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London
#1
Hi,

Can anyone recommend a good book about money management. I am consistently leaving money on the table and i was hoping that one of you seasoned guys might be able to point me in the direction of some much needed guidance.

I trade the eurostoxx 50 futures contract and use a 5 point trailing stop. However, i am sure that this is not the most profitable way and need some ideas on how to make that cash register ring louder!

Regards,

David Dunne
 

Robertral

Active member
Feb 8, 2004
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#3
FetteredChinos said:
firstly, do away with a trailing stop. crud way to exit trades IMHO

set yourself a volatility based target.

will improve your win rate no end, smooth your equity curve, and bring world peace.
Don't use all your money for going out on the lash...two reason; you spend your money and you walk in the office with a major hangover being unable to function properly
 

FetteredChinos

Well-known member
Jun 11, 2003
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Fraggle Rock
www.xlexceladdin.com
#6
yes, but you have fun entering the trades though...


seriously, im never doing that again. trading when 48 sheets to the wind is a sure way to doom and disaster.. i accidentally managed to enter a trade with 10 times my normal size..

trading £100 a pip on FX is not for the faint hearted..or the sober..
 

adrianallen99

Active member
Oct 29, 2003
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pay2pocket.com
#7
one of my friends made that mistake, the got confused about their leverage and lot size and ended up risking $100 a pip instead of $10 a pip. It was just before NFP and within a few minutes they were down $10,000.
 

G-Man

Active member
Feb 26, 2003
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#8
FetteredChinos said:
firstly, do away with a trailing stop. crud way to exit trades IMHO

set yourself a volatility based target.

will improve your win rate no end, smooth your equity curve, and bring world peace.

Interesting that you don't like sliding stops FC. Any specific reason for that or you just dissin' my strats?
 

Roberto

Well-known member
Aug 28, 2004
1,069
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uk
#9
FetteredChinos said:
some of us function best when our kidneys and livers (i have 2) are working overtime.
"Is life worth living? It depends on the livers" ... nah: doesn't quite trip off the tongue, somehow ... :(
 

FetteredChinos

Well-known member
Jun 11, 2003
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#10
G-Man said:
Interesting that you don't like sliding stops FC. Any specific reason for that or you just dissin' my strats?
unless they are variable trailing stops, they just dont seem to work in my opinion.

for example, if you set them too wide, you can leave well over half of a move on the table. bit galling to see a postion be 100 pts in profit, and you only bank 50-60 pts of it.

and if you set them a lot closer, you could well get stopped out for say -5 before the move gets going..

in terms of my personal preference, i like to set a fixed stop level, a reasonable fixed target level, and trust my entry to make it more likely that my target is hit before my stop.

hope that helps..

and theres nothing wrong with dissing strategies.. JonnyT has been doing it for years :cheesy:

FC
 
Nov 4, 2004
72
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16
London
#11
I dont get by what you mean a volatility based exit point? I set my trades up as follows:

1) a fixed stop loss when trade entered
2) a profit target for half of lot size - when hit, stop moves to break even
3) use the trailing stop for my remaining lots in order to catch thoose big runners.

I have heard a few people talking about using an exponential trailing stop - anyone got an views of these?

The issue i have with having a fixed profit target is that IMHO the winners are not big enough to cover those losers as you are not in a position to catch those really big moves that make up the majority of your pay packet. By taking some profit at a fixed stage, this enables you to hear the register ring (which is never a bad thing) as well as cover your comission costs for a few trades, with the ones that run making more than your losers. As long as you have set your first profit target at an economical and realistic level, and a stop that is wide enough to let your trade breathe but not too large so that your losers become bigger than your best winners, and you can pick winners more than 50% of the time, you will make money.