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Showing posts with the label position-sizing-cheat-sheet-by-garden

Characteristics of Fixed Fractional Trading and Salutary Techniques- OPTIMAL F FOR SMALL TRADERS JUST STARTING OUT

Characteristics of Fixed Frac tional Trading and Salutary Techniques OPTIMAL F FOR SMALL TRADERS JUST STARTING OUT How does a very small account, an account that is going to start out  trading 1 contract, use the optimal f approach? One suggestion is that  such an account start out by trading 1 contract not for every optimal f  amount in dollars (biggest loss/-f), but rather that the drawdown and  margin must be considered in the initial phase. The amount of funds  allocated towards the first contract should be the greater of the optimal f  amount in dollars or the margin plus the maximum historic drawdown  (on a 1-unit basis): A = MAX {(Biggest Loss/-f), (Margin+ABS(Drawdown))} where, A = The dollar amount to allocate to the first contract. f = The optimal f (0 to 1). Margin = The initial speculative margin for the given contract. Drawdown = The historic maximum drawdown. MAX{} = The maximum value of the bracketed values. ABS() = The absolute val