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|Software for Fixed
Ratio Position Sizing
Market System Analyzer (MSA) is a trading software application that includes fixed ratio position sizing. Market System Analyzer is designed to improve the performance of existing trading systems and methods by enabling the trader to explore different position sizing methods, optimize trade sizes, and analyze their trading using methods such as Monte Carlo analysis and significance testing.
In fixed ratio position sizing, developed by Ryan Jones ("The Trading Game," by Ryan Jones, John Wiley & Sons, New York, 1999), the key parameter is the delta. This is the dollar amount of profit per share/contract to increase the number of shares/contracts by one. A delta of $3,000, for example, means that if you're currently trading one contract, you need to increase your account equity by $3,000 to start trading two contracts. Once you get to two contracts, you need an additional profit of $6,000 to start trading three contracts. At three contracts, you would need an additional profit of $9,000 to start trading four contracts, and so on.
In Market System Analyzer, fixed ratio position sizing is selected from the choices on the Position Sizing Method tab.
Fixed ratio position sizing is selected from the Position Sizing dialog box.
Once the fixed ratio method is chosen, the main chart in Market System Analyzer is automatically updated to reflect the position sizing. The main chart displays the equity curve generated from the user's trade history with the chosen position sizing method. An example is shown below.
Main window of Market System Analyzer showing fixed ratio position sizing.
The initial position size (when the
accumulated profits are zero) can also be selected MSA.
The delta fraction
determines the delta for decreasing the position
size. The delta fraction is multiplied by
the original delta to calculate the decreasing delta. The delta fraction is set
to the value 1.0 by default, which implies the two deltas will be the same.
To learn how to optimize position sizing methods in MSA, click on the Next button at the bottom of the page or go to the online store below to purchase your own copy of MSA.
Download a fully functional trial version of Market System Analyzer. Evaluate MSA for up to 30 days. Click here to download now without obligation.
For a general article on fixed ratio position sizing, click here. For a full list of available trading articles, select the Article Library link at left.
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