joan178
01-02-2023 07:28,
Before I ch any flames with this, the name is meant to encourage conversation. I shall write about my ideas on this issue of position sizing, and will take any criticism or alternative ideas from the many great thoughts on this forum (that's serious, not sarcastic).
Okay, to start off, yes I've read the thread on money management from the beginner section. Can I know it completely? Probably not, but I have the jist (sp?) of it.
Now, as far as position sizing goes, I started off believing from the gambler's fallacy, which applied to Foreign Exchange, says that if I shed with one lot, next time I should place an order with just two lots (assuming 1:1 R:R and 50% win rate). If I lose again, then I should place an order of three lots, and so on and so on, until I win, which ought to put me ahead (although realistically, factoring in the spread, you will still be in the red).
I appear to recall someone stating here onnigeriaforextradingthat you should not increase position size just like this once you lose, but instead once you win. The result is precisely the same as the gambler's fallacy you are awaiting a loss as opposed to a triumph. Together with the gambler's fallacy, implemented either to streaks of wins or losses, you are going to wind up on another side you started on (i.e. you will be black after ending a loss streak and crimson after ending a win series ). Again, factoring in the distribute makes this a proposition either way.
This got me to thinking about the logic behind lot optimizing code and whatnot in some specific EAs. I ran simulation of an EA where I had a loss on a commerce with a position of 40 lots, which led to the code to maximize my lots for the commerce at 0.1! Of course the trade was a triumph of size in pips, but I was way down as a result of the optimized position size.
I am still uncertain what the reply to all of this is, but I feel it lies somewhere in increasing position with each rise in equity, but retaining it the same after losses. I understand in streaks that are intense this could let you go bust, I believe that this is to the true optimized lot figure.
I am open to All suggestions,
Okay, to start off, yes I've read the thread on money management from the beginner section. Can I know it completely? Probably not, but I have the jist (sp?) of it.
Now, as far as position sizing goes, I started off believing from the gambler's fallacy, which applied to Foreign Exchange, says that if I shed with one lot, next time I should place an order with just two lots (assuming 1:1 R:R and 50% win rate). If I lose again, then I should place an order of three lots, and so on and so on, until I win, which ought to put me ahead (although realistically, factoring in the spread, you will still be in the red).
I appear to recall someone stating here onnigeriaforextradingthat you should not increase position size just like this once you lose, but instead once you win. The result is precisely the same as the gambler's fallacy you are awaiting a loss as opposed to a triumph. Together with the gambler's fallacy, implemented either to streaks of wins or losses, you are going to wind up on another side you started on (i.e. you will be black after ending a loss streak and crimson after ending a win series ). Again, factoring in the distribute makes this a proposition either way.
This got me to thinking about the logic behind lot optimizing code and whatnot in some specific EAs. I ran simulation of an EA where I had a loss on a commerce with a position of 40 lots, which led to the code to maximize my lots for the commerce at 0.1! Of course the trade was a triumph of size in pips, but I was way down as a result of the optimized position size.
I am still uncertain what the reply to all of this is, but I feel it lies somewhere in increasing position with each rise in equity, but retaining it the same after losses. I understand in streaks that are intense this could let you go bust, I believe that this is to the true optimized lot figure.
I am open to All suggestions,