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Tsunami-trade.com money management program
We use a unique system of money management. We feel it’s a very conservative way to aggressively pyramid your profits! It uses the amount of profits you have made to date, to determine the number of contracts you can enter on each subsequent trade. We call this determining factor the “Tsunami-trade delta”. The delta is the amount of profits you will have had to have made trading one contract to increase your contract size on future trades. Likewise it’s the amount of draw down you can experience before reducing contract size. Taking a system’s greatest possible drawdown and dividing it by 2 commonly determines the delta. By using this formula, we now know that if we were to suffer the greatest possible draw down in any trading system, we would drop our traded number of contracts by 2.
Let’s consider the draw down of a simple trading strategy of a coin flip. Heads you win, Tails you lose. In a random series of 100 flips, starting with a theoretical $5000 account using for this example 1-point stops and 1 point profit targets and $4.80 round turn commissions, we had 49 winners and 51 losers and ended up with $4900. During this series of trades however, surprisingly we had a maximum draw down of $448 ($400 in trading losses plus $48 in commissions).
It is said that if your sample size is relatively small (100 is small compared to 1000 flips), double your experienced draw down to get the largest possible draw down if we were to continue this method of trading forever. That gives us a maximum draw down for our coin flip trading strategy of $896. We can round that off to $1000. Doubling that figure to be extra conservative, gives us a maximum possible draw down, if you were just flipping a coin to trade, of $2000. Halving 2000 gives us $1000 for our delta. That means to increase contract size by 1; we have to make $1000 in profits per contract. Conversely, if we lose $1000 per contract, we would drop our number of contracts by one. As an example, if you were trading 5 contracts, you would have to make $1000 X 5 = $5000 in profits before you can increase your trading size to 6 contracts.
Initially the goal of any trader should be to just stop losing! After that, making 2 points per contract per day can be a very handsome income! That’s the importance of a Complete Trading System and proper trading education! (See the below hypothetical illustration)
Hypothetical results of making +2 net Emini ES points per contract each day.
Week |
# contracts to trade |
Account balance |
Money management formula |
1 |
1 |
$5,000 |
$5000 + (1 X $500) |
2 |
1 |
$5,500 |
5,500 + (1 X 500) |
3 |
2 |
$6,000 |
6000 + (2 X 500) |
4 |
2 |
$7,000 |
7,000 + (2 X 500) |
5 |
3 |
$8,000 |
8,000 + (3 X 500) |
6 |
3 |
$9,500 |
9,500 + (3 X 500) |
7 |
4 |
$11,000 |
11,000 + (4 X 500) |
8 |
4 |
$13,000 |
13,000 + (4 X 500) |
9 |
5 |
$15,000 |
15,000 + (5 X 500) |
10 |
5 |
$17,500 |
17,500 + (5 X 500) |
11 |
6 |
$20,000 |
20,000 + (6 X 500) |
12 |
6 |
$23,000 |
23,000 + (6 X 500) |
13 |
7 |
$26,000 |
26,000 + (7 X 500) |
14 |
7 |
$29,500 |
29,500 + (7 X 500) |
15 |
8 |
$33,000 |
33,000 + (8 X 500) |
16 |
8 |
$37,000 |
37,000 + (8 X 500) |
17 |
9 |
$41,000 |
41,000 + (9 X 500) |
18 |
9 |
$45,500 |
45,500 + (9 X 500) |
19 |
10 |
$50,000 |
50,000 + (10 X 500) |
20 |
10 |
$55,000 |
55,000 + (10 X 500) |
21 |
11 |
$60,000 |
60,000 + (11 X 500) |
22 |
11 |
$65,500 |
65,500 + (11 X 500) |
23 |
12 |
$71,000 |
71,000 + (12 X 500) |
24 |
12 |
$77,000 |
77,000 + (12 X 500) |
25 |
13 |
$83,000 |
83,000 + (13 X 500) |
26 |
13 |
$89,500 |
89,500 + (13 X 500) |
27 |
14 |
$96,000 |
96,000 + (14 X 500) |
28 |
14 |
$103,000 |
103,000 + (14 X 500) |
29 |
15 |
$110,000 |
110,000 + (15 X 500) |
30 |
15 |
$117,500 |
117,500 + (15 X 500) |
31 |
16 |
$125,000 |
125,000 + (16 X 500) |
32 |
16 |
$133,000 |
133,000 + (16 X 500) |
33 |
17 |
$141,000 |
141,000 + (17 X 500) |
34 |
17 |
$149,500 |
149,500 + (17 X 500) |
35 |
18 |
$158,000 |
158,000 + (18 X 500) |
36 |
18 |
$167,000 |
167,000 + (18 X 500) |
37 |
19 |
$176,000 |
176,000 + (19 X 500) |
38 |
19 |
$185,500 |
185,500 + (19 X 500) |
39 |
20 |
$195,000 |
195,000 + (20 X 500) |
40 |
20 |
$205,000 |
205,000 + (20 X 500) |
41 |
21 |
$215,000 |
215,000 + (21 X 500) |
42 |
21 |
$225,500 |
225,500 + (21 X 500) |
43 |
22 |
$247,000 |
247,000 + (22 X 500) |
44 |
22 |
$258,000 |
258,000 + (22 X 500) |
THESE RESULTS ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE THE PROFITS OR LOSSES SIMILAR TO THOSE BEING SHOWN.
Is this really possible?
Probably not, since this scenario assumed no losing days which should be considered almost impossible for any system. The math however certainly does speak for itself and is intriguing! We believe our unique program of our incredible trading software, combined with live ongoing trading education has the potential to be truly life changing. You are invited to a free trial to see if this program is right for you. You be the judge!
Join us for a free 4 day trial of the new Tsunami Trading System.
Fill out this form, send it to us, and then join Hotcomm for a free trial week, one day before the trial begins. Here is the link to the Hotcomm website. |
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