Scale-In Simple Position Sizing Algorithm

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Presentation transcript:

Scale-In Simple Position Sizing Algorithm Justin Paolini www.fxrenew.com Scale-In Simple Position Sizing Algorithm

FX Renew Disclaimer The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. This website is owned and operated by FX Renew Pty Ltd ABN 50 168 652 542 the holder of an Australian Financial Services Licence (AFSL) to carry on financial services business in Australia, limited to the financial services covered by its AFSL no.455388. Any advice included in this webinar is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the general advice, the recipient should carefully consider the appropriateness of the advice in light their financial circumstances and should carefully review the FSG and terms and conditions of this website. FX Renew is not liable for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Past results are not a guarantee of future performance. RISK DISCLOSURE: Trading foreign exchange carries a high level of risk, and may not be suitable for all investors. The high degree of leverage available can magnify profits and as well as losses. You can lose more than your initial deposit. Before trading, please carefully consider the risks and inherent costs and seek independent advice as required. Please contact us, to discuss any questions or concerns you may have, we are here to help.

Welcome! My name is Justin Paolini… Welcome to this video. 10+ years of experience trading FX 6 years of experience as an educator Lecturer for the University of Ancona on Trading and Market Dynamics

What Position Sizing Does for You

Issue: Scarcity of Risk Capital

Benefits of Position Sizing Algorithms Avoid the common mistakes that often put aspiring traders out of business. Preserve Capital Avoid Disaster Maximize your profits

Avoid Incorrect Reasoning

Reality is Much Different

Reality is Much Different Unrealistic Martingale High MaxDD Lower Profit Realistic Scale-In-Simple Lower MaxDD Higher Profit

Plan for Extended Losing Streaks (they happen)

FXRenew’s Scale-In-Simple Algorithm Be quick and easy to use. Trade small at first. Capture profits. Only use the market’s money to build a larger position. Keep your monthly risk within defined limits (Typically no more than a 3% maximum loss per month). Have the flexibility to trade larger sizes based on the quality of the trade and the confidence level that the trader has in the position.

Scale-In-Simple Algorithm: Objectives Designed to work in harmony with FXRenew’s London Open Signals Targets 5% return per month, with limited downside (3%) and unlimited upside. Teaches you how to risk a set % of your account per trade. Allows for up to 6 trades at a time Targets 8-20 trade opportunities per month Usually Swing Trades, but also allows for short-term forays

FXRenew’s Scale-In-Simple Algorithm

Scale-In-Simple Algorithm: Tips & Tricks For short-term trades, your standard position size can rise to 3 units. For long-term trades your standard position size remains 1 unit (looking to scale-in to 10 units eventually). If you have profits locked in for the month you can increase your position size. Using the above example, if you lock in $200 of profits you may add into the spreadsheet that you are now willing to risk $400 ($300 initial risk plus ½ of your accumulated profits). You would now have a maximum position size of $40,000. Therefore your new unit size would be $4000 or 0.4% of your account. •You need to take into consideration your stop-loss distance when deciding on your position size. If you require more than a 100 pip stop you may need to trade a smaller size. Try not to risk more than 1% of your account on any one trade at a time. If you are close to your maximum loss for the month, you may want to trade a smaller size, so that you don’t hit your maximum loss. It’s important to stay in the game.

Scale-In-Simple Algorithm: Drawdown Rules If you hit your MaxDD (3%) but still wish to continue trading for the month, cut in half your position size and risk another 1.5% of your account. In total, you will be risking 4.5% to make 5% on your initial capital during the month.

I Have Reached My 5% Target: Now What? Keep Trading as normal Cut your position size in half to protect your gains Risk ½ your profits and swing for the fences Stop trading for the month.

Scale-In-Simple Algo: Additional Notes When you first start out, consider cutting your trade size by 50% for the first month in order to accumulate a profit and limit losses. If you have profits from the previous month, you can start by trading a larger size. Be Consistent! Don’t break the rules!

Justin Paolini www.fxrenew.com Thank You & Good Luck! 18