Basic money management issues adopted from Michael R. Bryant

"There are many different ways to vary the number of contracts or shares when trading. Some of the most commonly used methods, plus one variation on the fixed ratio method, are listed below:
1. Fixed number of Shares. The same number of contracts or shares is applied to each trade; e.g.,100 or 50 shares per trade( or) 100 or 50 shares per company
2. Fixed amount per contract/company. A fixed amount of account equity is needed for each contract or share; e.g., Rs.10000 for one company
3. Fixed fractional (also known as fixed risk). The number of contracts or shares is determined so that each trade risks a specified fraction of the account equity; e.g., 2% of account equity is risked on each trade.
4. Generalized ratio. This is a generalized form of fixed ratio, which includes an optional parameter to change the rate of increase in the number of contracts or shares with increasing profits."


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