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Guy,
Took profits on our two long S&P contracts (1468 & 1456) and for the "wild
hairs" we went short on the opening. The more conservative money is now on
the sidelines, waiting for what many would call a failure swing.
Steve Karnish
Cedar Creek Trading
http://www.cedarcreektrading.com
----- Original Message -----
From: Guy Tann <grt@xxxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Wednesday, July 12, 2000 6:49 PM
Subject: RE: Risk of ruin, amount per trade formula?
> Jean Jacques,
>
> I can appreciate the use of stops, it's just that whenever we've used
them,
> they have cost us money. That's why we went over to visual stops. I have
> found with stops and commodities, they are almost useless. Take those
> multiple limit days when the market is running against you. Your stops
> invariably take you out near the absolute top or absolute bottom. In that
> instance, I don't consider those stops to be a safety net at all. In
fact,
> I consider it to be terrible trading. If you're not working with multiple
> limit days in one direction or the other, you can always get out. Oh yes,
I
> forgot to mention, we never trade a thin market. Ever! Learned that
lesson
> years ago trading eggs, hides and bellies. Then you're just asking for
> trouble.
>
> Whenever faced with multiple limit days, we have waited for a pull back to
> exit the trade. Thankfully, we haven't seen that in years, since we're
only
> trading S&P futures and have never seen the day when we couldn't exit the
> market if we had wished to. Additionally, we try to trade with adequate
> capital reserves, so as not to put ourselves in that sort of predicament
of
> having to exit a trade due to a margin call. Since this is a secondary
> business for my brother and myself, and we don't use it to live on, we're
> better able to weather these draw downs with a little less emotional
> involvement. Again, it's a moot point in my opinion, but again that's
what
> makes trading so much fun and why we can be on opposite sides of a trade
and
> each make money.
>
> In terms of our equity trading, our approach is to try to balance our
> portfolio so as not to have all of our eggs in any one basket. On our
last
> long position (executed 6-23-00, I believe), we bought 28 different stocks
> in various industries, trading a like dollar amount of each (unless the
> stock was selling for more than $100 a share, then we bought just 100
shares
> regardless of price). While a few went against us, eventually a bunch
went
> our way. I guess you could say we were trading a mini-fund and trying to
> spread our risk over the entire trade. We did have about 20 options each
> that went up and down but eventually finished in our direction as well.
>
> Since we're trading basically in the direction of our S&P futures signal,
> we've done fairly well since our signal has been right a lot. We're
> currently on a losing trade, but again we don't look at intermediate
> results, other than to commiserate with each other when it goes against
us.
> :)
>
> 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: Wednesday, July 12, 2000 4:21 AM
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: Risk of ruin, amount per trade formula?
>
> Guy,
>
> About the stops, it is my almost 30 years experience that you can put NO
> STOPS at all. There may happen a completely unforeseen event that will
> triger
> a huge move and you need a sfety net. It does not mean that stops should
be
> used as a normal way to get out of a position. Your stops may ne very far
> (and in such a case your position shouls be reduced accordingly) and never
> get hit. But they are there just in case.
>
> As for the initial margin, teh exchanges take into consideration the
> volatility to ask for the initial margin. In fact taking into
consideration
> the initial margin as a mesure of the risk, you are indirectly taking into
> consideration the volatility, which makes sens . But you can not really
rely
> on the exchange for that because they have their own policy which does not
> take into account exclusively the volatilty into account. I have seen
> initial
> margin raise from 3 or 4 % of the contract's value to % of the contract
> value. That's a big risk!
>
> Jean Jacques
>
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