Part 3 of the systematic forex series. Covers fixed and trailing exits, R-multiple calculation, and position sizing using the Kelly formula and fractional Kelly.
This article explains core money management principles for forex traders, including Kelly Criterion and fixed-fractional sizing. Practical steps to calculate position size and control maximum drawdown are provided.
The Kelly Criterion helps traders size bets based on edge. Full Kelly is often too aggressive; fractional Kelly (1/2 or 1/4) reduces drawdowns. Learn to estimate W and R from at least 100 trades and avoid overbetting when uncertainty is high.
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