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    The Contract Plan

    Uploaded by

    Jennifer Sutton
    This document outlines a money management formula for progressively increasing the number of contracts traded based on profits made. It starts with 1 contract in the first week and adds 1 contract for every $500 in profits, up to a maximum of 22 contracts. This allows the account balance and number of contracts traded to grow steadily over time by taking advantage of small, consistent gains per contract.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    The Contract Plan

    Uploaded by

    Jennifer Sutton
    31 views2 pages
    This document outlines a money management formula for progressively increasing the number of contracts traded based on profits made. It starts with 1 contract in the first week and adds 1 contract for every $500 in profits, up to a maximum of 22 contracts. This allows the account balance and number of contracts traded to grow steadily over time by taking advantage of small, consistent gains per contract.

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    © © All Rights Reserved

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    This document outlines a money management formula for progressively increasing the number of contracts traded based on profits made. It starts with 1 contract in the first week and adds 1 contract for every $500 in profits, up to a maximum of 22 contracts. This allows the account balance and number of contracts traded to grow steadily over time by taking advantage of small, consistent gains per contract.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    31 views2 pages

    The Contract Plan

    Uploaded by

    Jennifer Sutton
    This document outlines a money management formula for progressively increasing the number of contracts traded based on profits made. It starts with 1 contract in the first week and adds 1 contract for every $500 in profits, up to a maximum of 22 contracts. This allows the account balance and number of contracts traded to grow steadily over time by taking advantage of small, consistent gains per contract.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Hypothetical results of making +2 net points per contract each day.

    Week
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    29
    30
    31
    32
    33
    34
    35
    36
    37
    38
    39
    40
    41
    42
    43
    44

    #
    contracts
    to trade
    1
    1
    2
    2
    3
    3
    4
    4
    5
    5
    6
    6
    7
    7
    8
    8
    9
    9
    10
    10
    11
    11
    12
    12
    13
    13
    14
    14
    15
    15
    16
    16
    17
    17
    18
    18
    19
    19
    20
    20
    21
    21
    22
    22

    Account
    balance
    $5,000
    $5,500
    $6,000
    $7,000
    $8,000
    $9,500
    $11,000
    $13,000
    $15,000
    $17,500
    $20,000
    $23,000
    $26,000
    $29,500
    $33,000
    $37,000
    $41,000
    $45,500
    $50,000
    $55,000
    $60,000
    $65,500
    $71,000
    $77,000
    $83,000
    $89,500
    $96,000
    $103,000
    $110,000
    $117,500
    $125,000
    $133,000
    $141,000
    $149,500
    $158,000
    $167,000
    $176,000
    $185,500
    $195,000
    $205,000
    $215,000
    $225,500
    $247,000
    $258,000

    Money management formula


    $5000 + (1 X $500)
    5,500 + (1 X 500)
    6000 + (2 X 500)
    7,000 + (2 X 500)
    8,000 + (3 X 500)
    9,500 + (3 X 500)
    11,000 + (4 X 500)
    13,000 + (4 X 500)
    15,000 + (5 X 500)
    17,500 + (5 X 500)
    20,000 + (6 X 500)
    23,000 + (6 X 500)
    26,000 + (7 X 500)
    29,500 + (7 X 500)
    33,000 + (8 X 500)
    37,000 + (8 X 500)
    41,000 + (9 X 500)
    45,500 + (9 X 500)
    50,000 + (10 X 500)
    55,000 + (10 X 500)
    60,000 + (11 X 500)
    65,500 + (11 X 500)
    71,000 + (12 X 500)
    77,000 + (12 X 500)
    83,000 + (13 X 500)
    89,500 + (13 X 500)
    96,000 + (14 X 500)
    103,000 + (14 X 500)
    110,000 + (15 X 500)
    117,500 + (15 X 500)
    125,000 + (16 X 500)
    133,000 + (16 X 500)
    141,000 + (17 X 500)
    149,500 + (17 X 500)
    158,000 + (18 X 500)
    167,000 + (18 X 500)
    176,000 + (19 X 500)
    185,500 + (19 X 500)
    195,000 + (20 X 500)
    205,000 + (20 X 500)
    215,000 + (21 X 500)
    225,500 + (21 X 500)
    247,000 + (22 X 500)
    258,000 + (22 X 500)

    We use a unique system of money management. We feel its 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 its the amount of draw down you can
    experience before reducing contract size. Taking a systems
    greatest possible drawdown and dividing it by 2 commonly
    determine 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.
    Since the Tsunami-trade.com system uses small stops on all our
    trades, we know at all times our maximum risk on each and every
    trade. Lets 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 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.

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