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Andrea Unger
ABOUT ME
! Andrea Unger
! *1966
SUCCESS
2005
S T O R I E S
F I R S T I TA L I A N B O O K
ON MONEY MANAGEMENT
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S T O R I E S
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S T O R I E S
VA R I O U S
T Y P E S O F R I S K
H O W D O E S I T W O R K ?
MARTINGALE
ANTIMARTINGALE
MARTINGALE
A psychological aspect of thinking that a trader should double their losses after each
losing trade in order to return the trader to a profitable state. This is the false belief that
after a losing streak the probability of having a winning trade increases, and vice versa.
ANTIMARTINGALE
This method tries to take advantage of winning periods and protects the capital during
losing periods. An easy approach to this is to use a constant percentage of risk.
For example:
A 2% risk of capital is equivalent to increasing exposure after a win and reducing it after a
loss (after a win the capital increases and so does the 2%. Likewise, when the capital
$$$$$$$$$$$$$$$
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first bet
$
No money left
second
bet
$$
third bet $$$$ $$$$
fourth bet
$$$$
To use the AntiMartingale approach, the most typical method is to fix the percentage of
risk per trade and then size the position accordingly.
What happened?
Final profits are
10 times LOWER?
A simple fixed percentage risk on every trade leads to completely different scenarios
depending on the strategies
Length of positions and the maximum losing position have a strong impact on the final result
A valid alternative would be to adjust the positions size based so far on the maximum losing
trade, on the worst day scenario
Doing it this way, we base our exposure on the maximum percentage of loss our equity
could have on any given day
THE POWER
O F P O S I T I O N S I Z I N G
Strategy 1 Strategy 2
Strategy 3
Strategy 4
Diminishing Risk from 2% to 1.5% and putting it all together:
THE POWER
OF POSITION SIZING Strategy 1
THE POWER
OF POSITION SIZING Strategy 2
THE POWER
OF POSITION SIZING Strategy 3
THE POWER
OF POSITION SIZING Strategy 4
THE POWER
OF POSITION SIZING Portfolio of 4 strategies
C O N C L U S I O N S
Single lot Strategies may lead to similar results, but once Position Sizing is applied
the scenario may change dramatically
To properly mix risk and reward, it is a good idea to focus on the expected loss per period
rather than a single trade loss, this leads to a better equity line development
Once all this is put together, the cooperation effect leads to skyrocketing profits
C O N C L U S I O N S
TA R G E T
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