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Hi Al,
AV> But, Thomas, you don't trade with 1% equity. You RISK 1% of
AV> current equity (the Turtles risk 2%) on each trade, at least
AV> initially. Risk is defined as the amount of money you are willing
AV> to lose on any given trade, not the amount of money invested in
AV> the trade. Big difference. So, the AB code is:
AV> PositionSize = -1*BuyPrice/(2*ATR(15));
AV> The Turtles risk 2%, so you would substitute -2 for -1 in the
AV> above example. As they add on positions, each unit they add is
AV> another 2%, but the risk for the first unit is decreased by half
AV> a unit, and so on. Money management is the key, not the actual
AV> entry and exit system.
When I looked at the Turtle System (admittedly some time ago) I
thought it was very hard for them to categorically state that they
had a finite risk on their positions. In theory, yes. But since
they actually inverse pyramid (as I understand it) they seem to get
quite far out on a limb, risk-wise. If things go well, they will
make a killing. But, if there is a sharp gap pullback, the top of
the inverse pyramid will lay waste to their risk management scheme.
Perhaps my understanding of this is not as it should be.
Best,
Yuki
mailto:yukitaga@xxxxxxxxxxxxx
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