Proper use of open, closed, and hybrid trade equity?
Posted: Sun Dec 05, 2004 11:32 am
Hello,
I have read a few posts on applying fixed fraction position sizing to either open trade equity (OTE), closed trade equity (CTE), or hybrid trade equity (HTE). However, I wanted to ask how this is used in practice. In the example below, it seems that the equity under all 3 methods will be the same by the time you put on the next trade. Can someone please look at my numbers below and tell me if there's sonething I'm doing incorrectly? Maybe I am misunderstanding their definitions. I apologize if the table is formatted poorly, I do not know how to make it neater here.
OTE CTE HTE Description
1,000,000 1,000,000 1,000,000 Start
950,000 1,000,000 900,000 Day 1 - not stopped out
900,000 900,000 900,000 Day 2 - stopped out
90,000 90,000 90,000 $risk on next trade at this point
1,200,000 900,000 1,080,000 Day 3 - keep position
1,200,000 1,200,000 1,200,000 Day 4 - exit signal reached, exit position
120,000 120,000 120,000 $risk on next trade at this point
Thanks.
I have read a few posts on applying fixed fraction position sizing to either open trade equity (OTE), closed trade equity (CTE), or hybrid trade equity (HTE). However, I wanted to ask how this is used in practice. In the example below, it seems that the equity under all 3 methods will be the same by the time you put on the next trade. Can someone please look at my numbers below and tell me if there's sonething I'm doing incorrectly? Maybe I am misunderstanding their definitions. I apologize if the table is formatted poorly, I do not know how to make it neater here.
OTE CTE HTE Description
1,000,000 1,000,000 1,000,000 Start
950,000 1,000,000 900,000 Day 1 - not stopped out
900,000 900,000 900,000 Day 2 - stopped out
90,000 90,000 90,000 $risk on next trade at this point
1,200,000 900,000 1,080,000 Day 3 - keep position
1,200,000 1,200,000 1,200,000 Day 4 - exit signal reached, exit position
120,000 120,000 120,000 $risk on next trade at this point
Thanks.