So yesterday I was tweaking a test of my strategy. First off, I started the strategy with an initial $10,000 starting balance. I used 0.05 Lot which is 5% of a standard lot. I never reached more than 4:1 leverage. The results are below.
Now lets take the exact same strategy, using the exact same parameters and see what happens when we apply a bit of money management. I just fixed the lot size with the account balance. If the account balance was $10,000, I started with 1 mini lot. As the account grew, the lot size grew with it. For instance, when the account was $30,000, my trade size started at 3 mini lots. When it was $100,000, I was starting with 1 standard lot. So forth and so on.
When I say I ‘started’ with a certain trade size, this is because I start small and add pending orders as the ‘trade series’ moves. I never went above 4:1 leverage on either of these tests.
Ok the results of the money management test is below.
Do you see the power of money management?
This is the exact strategy I trade every day.