Chapter 1 Never Lose again BY Matimatical Proven method
Introduction:
Successful proprietary trading requires not only a well-crafted trading strategy but also a robust money management formula. By employing effective risk allocation and risk-to-reward principles, traders can optimize their profitability and achieve success in prop funding account challenges. In this article, we will explore a powerful money management approach that enables traders to make informed decisions, maximize gains, and minimize losses.
Risk Allocation using the Risk Module Approach:
To begin, traders must identify their risk appetite and allocate risk based on a chosen risk module. The following table illustrates the total number of entries and the corresponding risk per entry (if Day 1) for each risk module.
Risk Module: 1 (Extremely Aggressive)
Total Entries: 12
Risk per Entry (if Day 1): $833.33
Risk Module: 2 (Aggressive)
Total Entries: 24
Risk per Entry (if Day 1): $416.67
Risk Module: 3 (Moderate)
Total Entries: 36
Risk per Entry (if Day 1): $277.78
Risk Module: 4 (Risk Averse and Recommended)
Total Entries: 48
Risk per Entry (if Day 1): $208.33
Risk Module: 5 (No Risk)
Total Entries: 60
Risk per Entry (if Day 1): $166.67
Now, let's delve into the profit and loss scenarios for the Risk Averse and Recommended module (Module 4) as an example, which allows 48 total entries.
Here is a breakdown of the profit and loss scenarios based on the number of entries won and lost:
Entries Won: 12, Entries Lost: 0
Gross Profit: $12,480
Total Loss: $0
Net Profit: $12,480
Entries Won: 11, Entries Lost: 1
Gross Profit: $11,440
Total Loss: $208
Net Profit: $11,232
Entries Won: 10, Entries Lost: 2
Gross Profit: $10,400
Total Loss: $416
Net Profit: $9,984
Entries Won: 9, Entries Lost: 3
Gross Profit: $9,360
Total Loss: $624
Net Profit: $8,736
Entries Won: 8, Entries Lost: 4
Gross Profit: $8,320
Total Loss: $832
Net Profit: $7,488
Entries Won: 7, Entries Lost: 5
Gross Profit: $7,280
Total Loss: $1,040
Net Profit: $6,240
Entries Won: 6, Entries Lost: 6
Gross Profit: $6,240
Total Loss: $1,248
Net Profit: $4,992
Entries Won: 5, Entries Lost: 7
Gross Profit: $5,200
Total Loss: $1,456
Net Profit: $3,744
Entries Won: 4, Entries Lost: 8
Gross Profit: $4,160
Total Loss: $1,664
Net Profit: $2,496
Entries Won: 3, Entries Lost: 9
Gross Profit: $3,120
Total Loss: $1,872
Net Profit: $1,248
Entries Won: 2, Entries Lost: 10
Gross Profit: $2,080
Total Loss: $2,080
Net Profit: $0
Entries Won: 1, Entries Lost: 11
Gross Profit: $1,040
Total Loss: $2,288
Net Profit: -$1,248
These scenarios illustrate the potential profit and loss outcomes based on the number of entries won or lost. It's important to analyze and understand these scenarios to gauge the profitability and risk involved in trading strategies.
Implementing the described risk management module in your trading strategy can significantly enhance your chances of success. By following a simple approach of flipping a coin and entering a buy trade on heads or a sell trade on tails, while adhering to the specified risk parameters, you can greatly minimize the risk of losses and confidently tackle any proprietary trading challenge. This systematic method, when combined with the recommended risk-to-reward ratio and disciplined money management, establishes a robust foundation for profitable trading outcomes.
Risk per Entry (if Day 1): $166.67
Now, let's delve into the profit and loss scenarios for the Risk Averse and Recommended module (Module 4) as an example, which allows 48 total entries.
