Spreadbetting Money Management techniques

[Adester]

Heah guys,

I'm at the crossroads in my trading, where the only thing stopping me from success is my money management. Are there any spreadbetters out there who can advise me on the following points.

1) How do you determine your stake size? Is this based on total account size, or amount at risk per trade?
2) How do you determine your riskrofit ratio per trade
3) When do you increase your stake size after a series of successful trades?

I know these may seem fairly straight forward questions, and I am not totally ignorant about money management. I just seem to be battling and I know it is down to getting this element mastered.

Any of your comments would be appreciated.

Thanks

Ad

 

[Hoggums]

Heah guys,

I'm at the crossroads in my trading, where the only thing stopping me from success is my money management. Are there any spreadbetters out there who can advise me on the following points.

1) How do you determine your stake size? Is this based on total account size, or amount at risk per trade?
2) How do you determine your riskrofit ratio per trade
3) When do you increase your stake size after a series of successful trades?

I know these may seem fairly straight forward questions, and I am not totally ignorant about money management. I just seem to be battling and I know it is down to getting this element mastered.

Any of your comments would be appreciated.

Thanks

Ad

1) both - My trade size is calculated thus: Balance *(Proportion of balance to risk) / (Stop distance in pips)
2) I don't - I let a trade run until it is stopped out. I don't set limits as I've found with my long term trading you're far better off leaving it to run and moving up the stops at regular intervals. E.g. I would have been very tempted to close my cable long at 2.03 - but I let it run and I'm now at 2.05
3) My stake size increases automatically with use of forumla in (1)

I only use my actual account balance for these calculations, not my valuation.

 

[rnl16616]

There are a number of ways to determine position size [equal allocation, percentage, volatility...] I would suggest that you read "Trade your way to financial freedom" by van Tharp as he goes into some detail on this topic.

Personally, I like the approach based on volatility so I use:
Position Size = Risk Amount (*) / Average True Range (10)
* Risk amount = 2% of capital

Exit uses a volatility based stop loss/profit. Currently, I only increase a position when the original entry has moved to breakeven and I have a repeat signal.
Good luck