Risk and Money Management

So, after entering my first trades and realizing my first losses (more on that later) I found a bit of a flaw in my money management system. Strangely all positions were supposed to be the same size, even though they clearly exhibited different amounts of risk. Just to be on the same page, by risk I do not mean the convential notion of risk in terms of standard deviation or Beta but merely the possible loss in the trade. In other words the difference between entering price and exit price marked by the stop loss . After looking at my programming in excel it became clear I should lower the risk each trade represents or otherwise I might be out of money sooner than later... Now the total amount at risk is no more than 10% of total capital. Usually it's less because this number is only achieved when I enter 36 positions (42 possible positions in my investment horizon of which 6 have a negative correlation with the other 36 and hence it is unlikely they will all create a buy signal). Also I included a buffer of 5% added risk to each trade to account for tracking error from slippage cost such as transactions, time delay or tracking error between the underlying and the financial derrvative I'm using. My first trades indicate that the 5% are quite a good proxy but I will make sure to adjust this number once I have more trades in. After applying those money management thoughts on my back test, I actually increased its annual return by almost 1% over the 10 year period I was looking at. In conclusion I now feel more confident I will be saving money to go after the big hit, which should be coming eventually.
That being sad let's look at the (not so amazing) trades since my last post. On the 13th I exited my Nickel Future trade when it hit the trailing stop with a 9% (all gains/losses include transaction cost etc.) loss.

 

Similiarly my trades in corn (-13.7%), lead (-7.5%) and zinc (-9.9%) got stopped in the same way.

Another picture perfect failing signal was demonstrated by my Brent Crude Oil trade (-9.8%). After breaking a high on the 19th, it looked like a nice upward trend was developing with the backing of rising stock markets and continuing positive market sentiment. However, teh oil price was soon to drop, hit the trailing stop and crush my hope for a medium term upward trend. In fact it seems liek markets in general will follow the oil example...

Especially last week hasn't been kind to my positions as markets seem to swing towards the bear side, at least for now. I'm starting to feel how I am still emotionally attached to some positions and how I have been wanting to take my gains on some older positions (been holding the Nifty 10 for quite a while now). This weekend should be my first little challenge as I will most likely have to realize a bunch of losses in most of my positions, even though I would rather "sit-and-hold" with "my dear" financial instruments. Alright, guess I still have some way to go until I reach teh final point of the "game" mindset. Hopefully on the right track though...