Originally Posted by
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Yes Ryan Jones' approach is fantastic for futures contracts, but IMO does not lend itself well to Currency Market place, because FOREX offers far more granularity than futures contracts. To mepersonally, this is a big incentive for trading. If a person looks at the formula above, it is clear , that the position size will increase or shrink in direct connection to the balance or the equity, depending on which is used for the computation. The percent of risk stays constant as the equity and balance grow and shrink.
BTW. Ryan Jones has a very good book on Money management and risk called The Trading Game
Chapter three deals with several types of money management. If I recall Fixed ratio kind is chapter 6 and I really liked chapter eight on Market Weighting. Thank you for the reminder of Ryan jones' work. He's one of my favorite trading authors.