Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

Using trade statistics to improve your money management system

Gary on the BMT Forums created this thread today:

The thread is all about money management, and how he is applying a simple analysis to his trading plan in order to develop a fact based money management system.  This is an absolutely invaluable approach.  It combines simplicity with intelligence and is backed by compelling data that is custom build on his trading plan.

With his analysis, he can determine if his stop is in the right place, and how to best capture the highest percentage of potential MFE (maximum favorable excursion) on any given trade setup.  Ninja only records the MFE that occurred while you were in a trade, but with Gary's method you can record the maximum MFE the setup delivered and then use that information to create a customized ATM strategy to capture those profits.

I highly encourage you to participate in this discussion and adopt this system. Gary is trading CL (crude oil futures) but this can be adapted to any market.



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