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Hi Howard,
Thursday, October 30, 2003, 2:06:53 AM, you wrote:
HB> Remember that there is a limit to the amount of doubling up that
HB> can be done when using Martingale money management. One of the
HB> reasons casinos say $5 minimum $500 maximum is so that
HB> Martingales hit the $500 limit and cannot recover the original $5
HB> bet. Our own limits are our trading accounts. Do the arithmetic
HB> and see how many consecutive losses it takes to hit you own
HB> person limit. Then look at the summary of your trading system
HB> and compute the probability that you will have that many
HB> consecutive losses.
And one more problem . . .
Unless you are trading only the deepest of the deep in terms of
liquidity, just how many times do you think you can double position
size without distorting the market, or even becoming the market? If
your size distorts the market, it's always going to be in a direction
that is unfavorable. Gosh, even a simple 10,000 share block balloons
to 320,000 shares by only the fifth double. By the seventh double of
course, you are trading blocks well in excess of a million shares.
That kind of size is going to impress. ^^_^^
Yuki
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