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Ichiro and Babe

 
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Nicker



Joined: 20 May 2005
Posts: 329

PostPosted: Tue Feb 13, 2007 11:09 pm    Post subject: Ichiro and Babe Reply with quote

Ryan Jones, in The Trading Game, covers the aspects of money management that relate not to trade or stop management, but to your growth strategy. He says that 90% of growth is due to this money management. Many common building strategies are summarized and compared for both growth and drawdown risk and reward.

It's an easy read, even for a non-techie like me; it's an eye-opener. Many traders delay figuring out how/when to add or subtract contracts for growth until they become consistent profitable traders with 1 or 2 contracts. This book will change your mind and help you see exactly what to do to become profitable immediately.

Using Jones' Fixed Ratio method you can safely build a $10k account to 1 million $ in 5 yrs, averaging only 10 ticks/day on the ER. Perhaps Mike can post his SS showing the progression. Knowing this, would it not make sense to wait for 2 or 3 good trades that might only be "singles" but have a very high probability of success, instead of jumping into too many iffy trades trying to make sure you don't miss a "home run?" If it makes sense and we still do not do what we would do, and do what we would not do, Ryan suggests that we delegate the things we don't do right.

Nicker
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majormike



Joined: 20 Nov 2006
Posts: 5

PostPosted: Wed Feb 14, 2007 7:37 am    Post subject: Ryan Jones' Money Management Reply with quote

Nicker and I have been working together on understanding money management a bit better and as she explained, Ryan Jones' work is what we are studying. His book is only 232 pages and is available on the internet as a download at www.torrentz.com/98104986f100949fb1b6c4661274ac4c43c80bd0
You'll have to download and install the torrent zip program to unzip the file. Please refer to the instructions on the website for installing the torrent program.

After reading his book once and then studying selected areas I just wanted to work with the formulas a bit so I could understand his methodology a little better and came up with a basic spreadsheet that illustrates the power of his methodology.

Following is an outline of assumptions and thoughts I used.
1. Overhead is not factored in.
2. The progression is based on 50 ticks per week as opposed to 10 ticks per day. May seem like the same thing but really it isn't because of drawdown and asymetrical leverage (read about this in the book). However, I believe 50 ticks per week is a reasonable and conservative goal.
3. The progression flat lines at 10 contracts.
4. The formulas used are explained thoroughly in Ryan's book as well as what role the delta plays.
5. I used 48 weeks per year in the calculations instead of 52 weeks. 48 weeks gives us a month off during the trading year. Hallelujah!!!

Please review the spreadsheet and let it be the catalyst to study Ryan's book.

Major Mike
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william



Joined: 27 Oct 2006
Posts: 21
Location: Haifa, Israel

PostPosted: Thu Feb 15, 2007 7:38 am    Post subject: Reply with quote

Jones' book is available as a free download without the BitTorrent zip hassle at nonewww.20method.com/freebooks.htm
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Guest






PostPosted: Thu Feb 15, 2007 1:30 pm    Post subject: Reply with quote

For anyone that needs to get a handle on this subject from a practical perspective then listen to CJ's Forex talk from 2005 that is posted on the main Web site:

nonewww.woodiescciclub.com/forex/clyde-wallace-oct2005.html

This is primarily a talk on Forex, but he explains about Money Management in a way that should be understandable by all.
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Angelo



Joined: 14 Apr 2010
Posts: 10

PostPosted: Mon Oct 11, 2010 11:46 am    Post subject: Reply with quote

Hello fellow traders
Well, 3 years later... : )
.
I read the Ryan Jones book some time ago, twice, and I think his system is very useful for traders.
Well, if somebody is using this money management system, I would be so much appreciate if someone is able to clarify one single question to me:
.
This system is a math comproved system that work very well, who read the book knows, so, there's a 'variant' in that mathematical formula called Delta, well, my question is how to set Delta properly, to have a good work system and optimize profits and protect it.
As I said, I read the book and understand perfectly, but Delta, that is the key, I could'n understand very well, Ryan says something about 50% of the max. drawdown, but what it exactly means?

Thanks in advance one more time for the answers.


Angelo


Last edited by Angelo on Mon Feb 21, 2011 4:33 pm; edited 2 times in total
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Nicker



Joined: 20 May 2005
Posts: 329

PostPosted: Thu Oct 21, 2010 10:47 pm    Post subject: Reply with quote

Angelo

50% of maximum drawdown (DD) means 50% of your worst equity loss trading the way you trade. So if you started with a $10,000 account and at some point had lost so much that your account was down $4,000, and that was the worst to date, then $4,000 is your maximum drawdown. Your delta could then be $2000 if you decide to set it at 50% of your maximum drawdown. So your account would have to grow up to $10,000 plus the $2000 delta = $12,000 before you would add additional contracts.

There is no rule for setting the % for delta, because it depends on your personal risk tolerance, experience, how well you follow your trading plan, and how well your plan works. If a person had a very strong plan, excellent discipline, a high win %, a high avg W/ avg L, and were disciplined in using a daily loss limti as well as a per trade loss limit, he could justify using 75% of max drawdown for delta. However, 95% of traders are not qualified to raise delta to higher than 50% of max DD.

If one trades CCI well, it really is not necessary to trade multiple contracts to make very good money, so work hard to be profitable with one contract. This will teach you to eliminate many sloppy trading habits that people learn if they trade multiple contracts before they learned to be profitable with one.

Nicker


Last edited by Nicker on Sun Oct 24, 2010 8:50 pm; edited 1 time in total
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Angelo



Joined: 14 Apr 2010
Posts: 10

PostPosted: Sat Oct 23, 2010 3:11 pm    Post subject: Reply with quote

All right, now I understood.

Another new technique that looks to be very effective that I learned, I will begin to apply this technique in my trades, with caution and discipline.

I am an avid follower of the Woodie CCI system

Thank you and all who make this forum a great place to learn and share experiences.

All the Best

Angelo
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