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Tuesday, January 29, 2008

Money Management Strategy: Kelly S

Challenge Accounts:

Sharebuilder Balance: $130.77

optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

Ok, all this business of money management. Money management this. Money management that. What strategy do I plan on using for the Challenge Accounts to trade with, once we are in a position to trade past what our incoming deposit from rule #2?

Kellys S.

It's my own little subset variation of the standard Kelly formula, and here is a video explaining it.




It works best with 12 month accurate systems, and a risk reward ratio of at least around 1 risk to 2 reward. My numbers (the 12 month number fluctuates) work out to . . % of Capital = (82% (1-82) / 70 ) / IF-THEN SUBSET.

Again, the advantage is that when you're doing well, the formula will automatically scale up your position size so that your reward becomes higher. When you start having losses, it will scale back your position size.


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Challenge Accounts:

Sharebuilder Balance: $130.77

optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders

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