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RE: Re[2]: Risk of Ruin



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Jean Jacques,

Another question!  If you get tired of them let me know.

I would think your average percent winning trades could vary depending upon
where you take your measures.  For consistency sake, we always keep records
on an annual basis (however I do keep a three year moving figure as well).
My numbers for 1999 are for the calendar year, likewise for the current
year, even though it's just through July.  For the current years results, we
use only the current year's trades, so at the beginning of the year, we
might be at 100% or zero depending upon the first trade.  For consistency
sake, and for all practical purposes, we would tack those first trades on to
the previous years results so that we maintain a fairly constant number.  I
think for our purposes, we should just take the last 20 trades, because
that's approximately 11 to 12 months.

If you take too small a time period you could drop your winning percentage
to zero, so I guess my question is, over what time period would you
calculate this winning percentage number?

Guy

Paranoia...you only have to be right once to make it all worthwhile!

-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of Macromnt@xxxxxxx
Sent: Thursday, July 13, 2000 4:13 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Re[2]: Risk of Ruin

You are right the rik of three bad trades in a row with 75% winners is about
2% (and not 6% as I wrote yesterday night by mistake, but it was very late).
It's to much for me especially if you trade short term. A risk of 2% does
not
mean that it will happen after 98 trades: it can happen after 2 trades and
you will not be around to take the 96 next winners (assuming that this bad
string does not repeat itself right away). Also the percentage of winners
may, at the same time drop to 65% during a while for instance raising the
risk of ruin to 4.2%. 75% being an average the result may be different if
the
size of the sample is smaller and the risk of ruin will rise substancially.

Jean Jacques