Money Management Technique 3: Optimal f and Secure f

These techniques were developed by Ralph Vince. These MM techniques claim that there is an optimal fraction that would produce better results for any given set of trades.

Optimal f can surely have phenomenal effects when it comes to profits, but it can also have devastating effects when it comes to losses.

Secure f is only a “safer” variation of the optimal f.

The most important drawback of these techniques is that the optimal fraction is obtained from a given set of trades’ historical results. In other words, it would have produced outstanding results on those historical trades. This does not mean that it will have the same results for the next set of trades (or coming trades).

They do not really tell us how much to risk on our next trade, for this reason we are not going through these two techniques.