Compounding interest – increase position size automatically

AlgoAlex · 2018-05-06T12:50:52+00:00

Everyone sooner or later everyone get in touch with the “holy grail” of trading, the compound interest. Far from a philosophical discussion, I would like to share and discuss available codes in PRT to develope it in automatic trading. At the moment I only know this: n= 1+(ROUND((strategyprofit)/2500)) //every 2500 add a contract //where buy n contracts at market Is it possible to make a percentage version? When equity reaches 3% profit it adds n contracts? Do you know other alternatives?

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05/06/2018 at 1:50 PM #69891 quote
AlgoAlex
Participant

Master
Everyone sooner or later everyone get in touch with the “holy grail” of trading, the compound interest.

Far from a philosophical discussion, I would like to share and discuss available codes in PRT to develope it in automatic trading.

At the moment I only know this:
```
n= 1+(ROUND((strategyprofit)/2500))  //every 2500 add a contract

//where
buy n contracts at market
```
Is it possible to make a percentage version? When equity reaches 3% profit it adds n contracts? Do you know other alternatives?
05/06/2018 at 3:17 PM #69892 quote
robertogozzi
Moderator

Legend
First you have to set up your initial equity and number of lots, later, when NOT OnMarket check if strategyprofit is > 3% of your equity and act accordingly:
```
ONCE MyEquity = 10000
ONCE nLots    = 1
IF Not OnMarket THEN
   IF Strategyprofit >= (MyEquiti * 1.03) THEN
      MyEquity = Strategyprofit
      nLots = nLots + 1
   ENDIF
ENDIF
```
You must be aware that after increasing 3%, your equity could fall by 5% and you might want to decrease the number of lots you are trading.

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05/06/2018 at 5:43 PM #69901 quote

AlgoAlex
Participant

Master

Thanks a lot Roberto.

You must be aware that after increasing 3%, your equity could fall by 5% and you might want to decrease the number of lots you are trading.

Is it possible to code?

05/06/2018 at 11:26 PM #69905 quote
robertogozzi
Moderator

Legend
There you go
```
ONCE MyEquity = 10000
ONCE nLots    = 1
IF Not OnMarket THEN
   IF Strategyprofit >= (MyEquity * 1.03) THEN
      MyEquity = Strategyprofit
      nLots = nLots + 1
   ELSIF Strategyprofit <= (MyEquity * 0.97) THEN
      MyEquity = Strategyprofit
      nLots = nLots - 1
      nLots = max(1, nLots)    //do not allow nLots to fall below 1
   ENDIF
ENDIF
```
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05/07/2018 at 9:35 AM #69913 quote

GraHal
Participant

Master

Above added to

Snippet Link Library

Thank You Roberto

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05/07/2018 at 5:45 PM #69954 quote
Leo
Participant

Veteran
I use this
```
// RISK CONTROL IF THINGS ARE GOING WONDERFULL
n = 1 + (strategyprofit / (17*pipvalue))
n=SQRT(n)
n = round(n * 100)
n = n / 100
n = max(1,n)
```
When the code wins 17*4=68 pips then it duplicate the size of lot.

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05/07/2018 at 7:09 PM #69963 quote

GraHal
Participant

Master

Above added to Snippet Link Library.

I can’t see where the *4 comes from, but maybe I need to think about it more do I? 🙂

05/07/2018 at 7:47 PM #69968 quote

robertogozzi
Moderator

Legend

I tried to figure out what 4 stands for, as well, since I’m not a fan of maths.

I guess it has to do with the square root. If you are trading 4 contracts and want to double that number, if you take the square root if, which is two, then you’ll have to multiply it by 4 to get the correct number. Maybe GRAPH (or Leo) could help!

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05/08/2018 at 7:34 AM #69981 quote

Leo
Participant

Veteran

Hi all,

welll actually is not a 4, haha sorry.

Look, the code is based in the strategy profit. Therefore I do not want something linear because when it wins the next trade is quite high. Which I choose and works well is the root fuction. Normally a trade quite small amount and very short period of times.

Lets say, in this example (with strategyprift/17), when the code wins 17 pips then the next trade is 1+17/7=2 then root of 2 is 1.41… the next trade opens 1.41 lots

next trade win another 17 pips, then 1+34/17=3, root of 3 equal 1.73. Next trade will open with 1.73 lots

next trade win another 17 pips, it means that the strategy profit is 3 times 17 so, 1+51/17=4, root of 4 is 2 then

when the strategy is 3 times the 17 then it opens 2 lots.

in summary if the initial n=1 and you want to duplicate the number of lot after certain number of pips winning, then take the number of pips you desire divided by 3 and remplace the 17 in the code. For example. My initial lot is 1, after 100 winning pips I want to duplicate the number of lot by 2 then, the fist line of the code will be

N=1+(strategyprofit/(33*pipvalue))

hope I clarify the code.

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