Computer test results, multiple contracts... *PIC*
I tested the concept of making bigger trades (more contracts) as your account grows.
I fed a montecarlo program 300 ES trades dating from Jan 07 to December 09.
The results in the image have a heading 'runs where equity dipped below -37'.
This means that if the initial account size was $3000, then the account would draw down
37 ES points ($1850) leaving only $1150 before the profits got the equity out of the dip.
When trading a single contract this happens 0.2% of the time.
However, with multiple contracts (up to 20) this only happens 0.32% of the time.
There is only a slight increase in risk created by doing this.
According to the test it seems well worth the risk to pile on extra contracts as your account grows in size.
