Asset Allocation by Malcolm Morley

If you’ve looked at my website you’ll get an idea of the approach I use, which is to basically divide my capital up amongst various ideas/methods/pairs etc. Then I apply sound money management methods against each individually. (By sound, I mean something like a FFP approach). That way, my good methods prosper; and my bad, wilt.

If you’ve looked at my website you’ll get an idea of the approach I use, which is to basically divide my capital up amongst various ideas/methods/pairs etc. Then I apply sound money management methods against each individually. (By sound, I mean something like a FFP approach). That way, my good methods prosper; and my bad, wilt.

Providing you keep track of what’s going on, you can then slowly add additional funds to the methods that are doing well.

Additionally, when you get a new idea, it can be implemented easily with a small capital allocation, and if it does well, simply move more funds to it from less successful methods. By using something like a FFP money management, nothing else changes – just the trade size.

and …

I separate things by using multiple sub-accounts, and assign a separate Excel worksheet for each method to keep track of performance and trade information (prior to automation, this was principally to manage my trade sizing algorithms). I also have an additional Excel sheet that adds everything up to give me my consolidated figures. Yard is correct, I feed the stars, and starve the dogs; that’s to say capital flows to what’s working, and providing my consolidated ‘ride’ is within acceptable limits, I don’t worry too much about the volatility of the components.