Fixed ratio money management

[hmp]

Hi
I would like to know what is fixed ratio money management and how to apply it practically in context of Indian stock market esp. in nifty trading.
Thanks & regards.

 

[raul12]

Hi
I would like to know what is fixed ratio money management and how to apply it practically in context of Indian stock market esp. in nifty trading.
Thanks & regards.

I've got basic knowledge about it.

Fixed Ratio money management is based on a concept known as "delta". The delta is the amount of profit that needs to be achieved before increasing one's position size.

If a trader starts with 1 contract and uses a delta of $1,000, then the trader can increase the position size by 1 contract every time the delta is achieved. The best thing about Fixed Ratio money management is that a trader needs to "earn the right" to trade larger position sizes. However, since the right to trade larger positions is based on profits and not necessarily the actual account size, traders using Fixed Ratio money management can have quicker exposure to larger positions when trading is profitable.

Hope it helps.

 

[James Martin]

Money management is often viewed as a dull, sophisticated idea best left to professionals. But this couldn't be further from the truth. Money management is an exciting concept that all serious traders need to understand. In fact, money management alone can be the difference between modest returns, and phenomenal gains.

 

[hmp]

The fixed ratio money management system is used in trading options and futures. The idea behind fixed ratio trading is to help you increase your exposure to the market while protecting your accumulated profits.

Shaikh saheb
Will you pl. explain me in detail about how to increase my exposure while protecting accumulated profits by using this concept?
Thanks & regards.