I'm currently working on backtesting different money management strategies over some of my discretionary trading accounts.
To those that trade professionally, have you found that it is best just to keep your money management simple (e.g. 1% fixed fractional risk) or do you get creative with not only increasing exposure(pyramiding) but decreasing exposure based on your equity trend? What would you recommend I learn in order to optimize my money management (books etc)?
I'm concerned that I could easily overdo this and optimize my money management too much.
Here is an example of what can be done with some money management optimization.
This is my experimental discretionary account with and without money management optimization (reason for so many "contracts" is because it is CFD account):
NORMAL, FIXED FRACTIONAL.
OPTIMIZED. OPTIMAL F POSITION SIZING, Equity crosses 3-trade M.A causes 90% reduction in trade volume(just to illustrate)
At what point am I just getting arbitrary? because I can see *some* validity in using an M.A on your own equity curve. If your losing and the environment is the same this could be a signal that something is wrong with your trading etc