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  1. #1
    Solid Member ionone's Avatar

    Adjust Bet Regularly !!!

    hello

    i created a small Matlab program to show how important it is to adjust the inital bet, depending on your gains of course.

    here is the program (very simple):

    Code:
    trades = 120
    capital = 1000
    earnings = 1400
    loss = 700
    
    tot1 = capital
    
    for i = 0 : trades/2-1
        
        tot1 = tot1 + earnings/(trades/2) * floor(tot1/10)/100
        tot1 = tot1 - loss/(trades/2) * floor(tot1/10)/100
    end
    i based this program on the regular way of trading (using lots from 0.01). and i set 1000€ equals to 1.00 lot

    With this program we can have fun computing how much we would have made if we had adjusted the lot with every trade.

    for example, if we won 10€, to a total of 1010€, we can adjust the next lot to 1.01.

    I insterted bad trades every other trade to keep things realistic.

    Let's take an exemple:
    we made 1400€ and lost 700€ with 120 trades. We had an initial capital of 1000€

    If we don't adjust lot, we would've won 1000+700 = 1700€

    but if we had adjusted the lot, we would have won : 1968.9 € !

    so almost +270€ ! that's a huge difference!

    also we can see that going from 120 trades to 240 we would've won 1988.9€. That's +20€ : not a lot but it counts also!

    also for regular trading, i highly encourage getting cent accounts whenever possible (depending also on the highest bid possible, you do nto want to be limited by the max amount you can trade), because it allows to adjust the lot size more precisely, thus winning more.

    here is step by step one process:

    Start with 1000€
    win +10€
    capital is 1010€ we can now bet 1.01 lot
    next we lose : -5 * 1.01
    capital is 1004.95
    win + 10 * 1.00
    capital is 1014.95
    we lose : -5 * 1.01
    capital is 1009.9
    win + 10 * 1.00 (not 1.01 yet!)
    capital is 1019.9
    we lose : -5 * 1.01
    capital is 1014.85
    win + 10 * 1.01 (finally!)
    capital is 1024.85
    etc...
    the start may seems like we have less money (because the lot increment falls every time on the lose and the win has no increment yet), but in the end it is very profitable of course.

    so to maximize gains, you have to constantly compute the most efficient Lot to trade.

    EDITED
    Jeff
    Last edited by ionone; 05-02-2016 at 08:19 PM.

  2. #2
    Veteran Member Ronnel's Avatar
    So how can we use that in Binary Options?
    Duct Tape can't fix OTM

  3. #3
    Legendry Member willyw's Avatar
    This is program for forex trading

  4. #4
    Specialist Member Million Dollar Baby's Avatar
    This idea can be implemented in BO because the logic behind this is to optimize your entry price (or lot size in case of forex). In BO, we can simply change our entry price according to the net capital. But it is specifically for those traders who strictly follow 'invest a specific percentage of your capital' rule.

  5. #5
    Moderator Kolyo's Avatar
    This approach is good for traders where position sizing is possible. When you trade binary options with a small bet size like 10-20 or even 100 USD it is difficult to adjusts the bet size so precisely. I think that there are better approaches for trade size adjustment. Tomorrow will give you some hints
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  6. #6
    Solid Member ionone's Avatar
    Quote Originally Posted by willyw View Post
    This is program for forex trading
    no you can use that with binary options as well

    you just have to adjust your bet depending on your gains.

    for example if you bet $10 and you have an account of $1000, when you reach $1100, bet $11, and when you reach $1200 bet $12
    if you can bet 11.312 do it. The more precise you are the better. This has been demonstrated when i doubled the number of trades : at the end it's the same gain programmed, but the fact that i multiplied the trades also multiplied the precison, so we made more more precise trades and upped the lot more often and then it brings more money.

    this is just an example, but you have to make your bet bigger as your capital progresses

    and the gains are exponential: meaning the more money you have the more it will bring : the equity will not be a straight line, but and exponential one. Instead of winning $50 each month, you will gain $50, then $100, then $200 then $400, then $800, etc each month

    Jeff
    Last edited by ionone; 05-04-2016 at 03:07 PM.

  7. #7
    Master Member SeasaltMcFish's Avatar
    I use this money management for years (as far as possible). It's the most optimal way of defining your trade size.

    However, differences are small when using round numbers, so a little adjustment is no real problem.

    It's the same as using a fixed percentage of your account for trading. I like 2% per trade, but that's also because sometimes I may have to put in 5 trades on the same entry attack.

    The % you use is very depending on your strategy and the possibility to put on more money when needed.

    I would suggest 2-5% of the money you have reserved for trading (including money you have behind in an other account, like your bank etc...)as an optimal %.

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