Spread Betting Money Management

[richardsbenson]

I don't know if this is the right place to put this attachment but here goes.
I hope this might be able to help someone out with a simple bit of money management
I have been using this for about 2 months. with good resaults so try it and see,

Some feed back and improvments would be great.

 

[ben_catt]

Try Using the ATR of a Market

I agree with the 2%, a good amount to risk per trade.

A different way to look at it is to determine your stake per point using the Average True Range of the market you are trading.

For example:

Say you want to trade the Dow. Today the 20 Day ATR of the Dow is roughly 89.

Your capital allocation is 2% per trade or £100 (allowing a total trading pot of £5000).

So, if you set a stop at 3 x ATR, you have a stop loss 267 points below/above your entry.

Therefore, your maximum stake per point is £100 / 267 = £0.37 per point.

This is below the minimum for almost all the spread betting companies so you cannot afford to trade that market unless you risk a greater percentage of your total capital.

Say you risk 5% per trade, your total stake for this trade is £250 so your risk per point is:

£250 / 267 = £0.93 per point.

That's the way I usually calculate my risk per point.