Wednesday, July 16, 2014

First Experiment (Money Management)

On my first post, I mentioned about conducting an experiment with the hypothesis ("Money can be made constantly through a system from trading)... This statement will be not applicable to me until I can prove it otherwise so how am I going about doing this?

There are several inputs I have to define before starting the experiment.. The first thing will be about system.... In my own definition, a system is a set of rules which regulate the whole process so some of the components of it are like tools, risk management, entry, exit and etc.

System

a) Money Management
I will adopt a high aggressive strategy, starting with a low capital. This is a new approach for me as I usually start with higher capital, with hope of generating consistent returns from it but always ended up blowing my own account. This mm system which I am referring is inspired by a post in the forexfactory forum. Initial capital will be 100 USD.

Initial Capital : $100
Risk : 50%
Risk Reward : 3











My simple rules be for this MM system will be as follow

*3 consecutive burst before tweaking on RR
* Learn to lose well
* Patience
*Monthly max 2 attempt 
* Increase RR on next attempt if I can go past level 6
*Increase Account on next attempt if I can go past 10

This is a very audacious attempt and very unlikely to happen given many reasons like the Risk reward I set and etc but I want to take a different approach this time, trying with lesser capital aiming higher return (low chance) than high capital with moderate return (higher chance). In additional, I want to hone my discipline, patience and my willingness to lose...  I will proceed on with the entry/exit mechanics on my next post. 

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