Resource for Position Sizing

BarroMterics Views:  Resource for Position Sizing

Forex Decoder is offering an interesting free resource for FX position sizing (DDSMM). The free download will work with Futures, CFDs and Shares; but you need to normalise the pip results to conform to FX sizing.

The claims for their spreadsheet are interesting. They claim that their position sizing software will dramatically improve performance and show a number of examples. We tested the software and found:

  1. If you keep to the risk management rules, the software will perform as expected.
  2. Breach of the risk management rules can produce adverse consequences. In some of our tests, where we broke the risk management rules, our position sizing approach produced a -4% result;  DDSMM produced a -10%. So, not only was there no improvement, there was a significant diminution.
  3. DDSMM will not turn a negative edge to a positive one.

So, what results can we expect from DDSMM – if we follow all the rules. Amazingly quite a lot. My trading this year has produced a return of +4%. Using the same results and adopting the DDSMM method, we’d see a 44.7% return. That is quite a difference! Admittedly, based on our testing, we introduced some minor tweeks; nevertheless, the improvement is significant. Best of all the manual software is free.

7 thoughts on “Resource for Position Sizing”

  1. Thanks Ray, just wondering though what position sizing formula is being used here? Seems like fixed % formula or is it something new?

    I’ve studied all the usual methods including variations like Ryan Jones so wondered if this method is really anything new. Cheers. Paul

  2. Hi Paul

    Thank you.

    Since I don’t have access to their code, I don’t know. But it appears to duplicate my idea of ebb and flow position sizing.

  3. Hi Ray, how would you normalize the pip value?
    I’m working with excel generated random trades, and want to make a lot of comparison between fixed % MM with DDSMM. Thanks a lot.

  4. think twice before you buy from mike swanson, especially ddsmm/fx decoder-product.

    absolutely not worth the money they ask for.

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