FAMILIAS QUE SE ENCUENTRAN EN CICLO DE CRECIMIENTO

Perfil Comparado por Tipo de Familia según Ciclo

FAMILIAS QUE SE ENCUENTRAN EN CICLO DE CRECIMIENTO

You have probably heard about the Kelly Criterion by now. I will try to give you a quick lesson about it, in order to teach you how you should

implement it when using our system.

This Criterion was developed by John Kelly and implemented in gambling and investing by Edward Thorp.

The Kelly Criterion is the strategy that will maximize your wealth over the long term. It beats any other money-management system, and this is why we are going to use it.

Did you hear the stories about the MIT Blackjack team beating the casinos and making millions of dollars?

They were using the Kelly Criterion in order to optimize their betting size and guarantee that their bankroll was growing as fast as possible.

And if it’s good enough for those MIT graduates, it is good enough for us. The only problem with the Kelly Criterion is that the volatility of your total bankroll will not be minimized.

Unlike Markovitz’s theory on minimizing risk while maximizing returns, the Kelly Criterion only tries to maximize your return.

Some prominent economists have written peer-reviewed articles arguing against the Kelly Criterion, because they think that Markovitz’s approach to portfolio management is the optimum one.

I say that they should all go back to their caves, while we make the money. And I can talk bad about them, because I am an economic enthusiast myself, albeit a renegade.

They are always arguing about the stupidest things you’ve ever heard. I won’t bog you down with the details, but let me tell you that most of the things that economists study, have no correlation with the real world of money

making.

Some claims have been made that even Warren Buffett and Bill Gross use the Kelly Criterion money management system. That is enough to tell me that this system is very good.

If the richest man in the world uses it, it can’t be as bad as those economists say it is.

It will not minimize the volatility of your portfolio; in fact the volatility will be quite big.

What the Kelly Criterion will tell you is how to choose the optimum ‘bet size’ against a set of probabilities and returns.

For instance, it will tell you exactly how much you should bet if your chances of winning are 51% and your payoff is 2-to-1 in order to maximize your long-term return.

And one good thing about the Kelly Criterion is that it will never let you go bankrupt. That is because the bet size is scalable; it will always be a

fraction of your bankroll and not a fixed amount of money.

This way, if you lose money the Kelly Criterion will tell you t0 decrease your bet size as you no longer have the opportunity to invest what you used to.

It is a very good money management system because of this, as it will prevent you from going crazy and betting more than you should in a single trade.

However, you must be aware that if you use the full power of the Kelly Criterion system, your bankroll will probably suffer huge losses and equally huge wins. The volatility might be huge.

This is why the Kelly Criterion is supposed to be a long-term money management system. Rather than blowing all your money away in a single trade, deposit more money in your account, and blow it all again, the system assumes that you keep track of your bankroll over time, and that you adjust your bet sizes accordingly.

Another problem with the Kelly Criterion is that, having to do the math all the time, in order to figure out the exact fraction of your bankroll you should invest might scare you.

This is why I did all the math for you.

In the last page of this chapter, you will find a table with both the Ichimoku System signals, and how much you should invest in the trade.

This way, you don’t need to pull your calculator all the time. You can just take a look at the table and you’ll quickly know exactly the fraction of your bankroll you should invest.

You should understand the Ichimoku System if you want to use my money management system, because you will be constantly checking for the signals necessary for you to choose the optimum bet size.

Before we start, I just wanted to tell you that money management alone will not bring you incredible results, but it will help you maximize your gains and minimize your losses.

So your first goal is to understand exactly how to make the most amount of money by using the Ichimoku System, not how to use the Kelly Criterion.

After you have mastered the Ichimoku, then you can focus on the money management aspect of trading.

Okay, let’s begin.

I know that you might not be very familiar with math; however, I feel that you should know at least the basics of the mathematics of the Kelly Criterion in order to know what you’re doing with your money.

The Kelly bet, or the fraction you should invest into each trade is given by

Where f* is the fraction of your bankroll, b is the payoff odds you’re receiving, p is the probability of winning and q is the probability of losing (1-

p). E is how confident we are in our trading abilities (a modification I made).

What is that formula telling us? I don’t care, and neither should you. It won’t add to your money making skills. That formula is a tool, and should be used as the tool it is.

As of today, I would advise you into using E=0.3 for now and as you get better, you can increase it. Use at most an E=0.8, it will be safer for your bankroll this way.

Okay, how about some real numbers now?

To use the Kelly Criterion, we have to estimate the winning percentage of the strategy we are utilizing, and our odds.

I will use standard odds of 2 to 1, because it is safe enough and I believe that on most cases, this is how much you would get, double of what you are risking, especially on Forex Trading. If you want to change this, you can. Just use the spreadsheet I gave you to change the odds.

Now, what about the specific strategies? How much should you invest in each of the Ichimoku Strategies?

I will create a small table, so you can find out the probability of winning with our system (this is all estimated from past trades and my experience).

You will find on the table the following:

Number of signals – The number of signals that the Ichimoku System is giving you. For instance, if you see both a Tenkan/Kijun Cross and a Kijun-Sen Cross, that would be two signals.

But there are a couple of subtleties in the system, so I have created another table so you can calculate the number of signals easily. Probability of Winning – This is the probability of you entering a

winning trade. It obviously depends on the number of signals, and it is in direct relationship with them.

Probability of Losing – This is the probability of you entering a losing trade. It can be seen as the complement of the Probability of Winning. And it is in inverse relationship with the number of signals you’re getting.

Number of Signals Probability of Winning Probability of Losing

1 48% 52%

2 57% 43%

3 62% 38%

4 69% 31%

5 76% 24%

I am making your life as easy as it is humanly possible. Okay, now that we have the probabilities we should use with the Kelly Criterion, how about the number of signals?

Well, I have created this kind of system in order to make your life as simple as possible.

When I say the number of signals, I mean the number of trading signals you are receiving from the Ichimoku in a given trade.

Here’s a way to think about it: Suppose in the same trade, you had both a bullish Kijun-Sen Cross and a bullish Tenkan/Sen Cross. How many signals are you getting?

Two signals, of course.

It is that simple. I have also separated the number of signals by the kind of cross that is happening.

For instance, if you have a bullish Kumo sentiment, a strong bullish Kijun-Sen Cross and a strong Tenkan/Kijun Cross, how many signals are there?

Only three? Wrong!

There are in total five signals. You forgot to count both strong factors that add up to the trade.

I have also created a table for the number of signals, so you can easily see how many signals you are getting in every trade you enter.

Strategy Weak Neutral Strong

Relative Tenkan/Kijun Cross 1 1 2

Kijun-Sen Cross 1 1 2

Kumo Breakout 1 1 1

Bull(Bear) Strategy + Bullish(Bearish) Sentiment 2 3 4 Two Bull(Bear) Strategies + Bullish(Bearish)

Sentiment 3 4 5

Two Strategies + Different Sentiment 2 3 4

Now you just have to plug in the numbers. I made all this Kelly Criterion money management strategy as easy as I could for you.

What most people would tell you is to simply find out what is the statistics of your winning percentage and go from there.

But that would send the wrong message: the message that every trade you get in has the same probability of success.

So I created this complete personalized system, and it can only be found in this course.

Let’s see an example now:

By using our table, we can see that we have two strategies at work on the weak side, but the sentiment of the Kumo is inverted. So we only have 2 signals. By checking our Probability Table, we have a 55% chance of making money here.

Using the Kelly Criterion, we have that the fraction of our bankroll that we should invest is 9.75% of our bankroll. But how would that translate in terms of Forex trading?

Well, you should invest up until your margin is 9.75% of your bankroll. So that in case you lose, you can only lose 9.75% of your bankroll.

It’s easy right? The Kelly Criterion is very useful, and will help you increase your bankroll quickly and easily. You might get some volatility, but you will also get the best exponential growth rate on your money.

I know, this was a quick chapter, but I have given you a complete system for money management. It may seem simple, but the mathematics behind it is very complex. I could talk about this for ages with you, but I’d rather give something you can use today.

C

ONCLUSION

I hope you utilize all the techniques I have taught you as you progress into becoming a true Ichimoku Trader.

If you want to know exactly what will make you the most money in the long run, here is a small list:

The Relative Tenkan/Kijun Cross coupled with Candlestick Patterns Risk-Reward Analysis

Money Management That is it.

That is all you need to know in order to make a lot of money with this system. Now go trade.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED 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 PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THESE METHODS MAY HAVE WORKED IN THE PAST, PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH TRADING FOREX CONTRACTS CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION SINCE ALL SPECULATIVE TRADING IS INHERENTLY RISKY AND SHOULD ONLY BE UNDERTAKEN BY INDIVIDUALS WITH ADEQUATE RISK CAPITAL.

ANY ADVISORY OR SIGNAL GENERATED BY ICHIMOKUCLOUD.COM IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY. ANY TRADES PLACED UPON RELIANCE ON WWW.ICHIMOKUCLOUD.COM SYSTEMS ARE TAKEN AT YOUR OWN RISK FOR YOUR OWN ACCOUNT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. WHILE THERE IS GREAT POTENTIAL FOR REWARD TRADING FOREX, THERE IS ALSO SUBSTANTIAL RISK OF LOSS IN ALL TRADING. YOU MUST DECIDE YOUR OWN SUITABILITY TO TRADE OR NOT. FOREX RESULTS CAN NEVER BE GUARANTEED. THIS IS NOT AN OFFER TO BUY OR SELL FOREX CONTRACTS.

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