There are only really two reasons to use money management.
- To protect your capital.
- To try to get rich quicker.
If you reduce position size as you lose money then you are protecting your capital. If you increase position size as you win more money then you are trying to get richer quicker. If you do the latter and never do the former and your position size is too big compared to your capital then you risk blowing up your account.
So everyone has to decide their own risk to reward ratio. Do you like your money or are you happy to never see it again if your gamble does not pay off?
The best money management rule is to start with a lot of money that you can afford to lose!
Quite agree with you @Vonassi, but I really think Money management is the second key after strategy (But people always look for the Graal strategy)
What Money management do you generally use on your algos please ?
