will see proof that using only one strategy with positive expectancy can make
your rich but can also make you poor. Trading results depend upon the
statistical distribution of trades which nobody can control.
you CAN control are many other factors, amongst them is your investment portfolio
structure, or better, the various strategy-market combinations. Doing this
right increases the chance of your trading being a profitable activity. See how
it is done.
Note of caution. This article is for
a serious trader who is prepared to put to use parts of his brain that process
mathematics and related sciences. Traders need to use mathematics and statistics for
proper analysis in order to develop proper trading approaches. Please note also that numbers are shown using the European format ie. a comma is used as a decimal separator and a full stop as a thousands separator.
What is the standard advice you hear/read about money management (MM)?
The standard
advice one gets when s/he starts trading is to trade (very) small. “Risk 1% or
less per trade. Maybe 2%. Maximum 3% not too often!”
Such advice
is normally not supported by any serious background information. Why not risk
0,1% or 10% …
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