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Jean Jacques,
The number of losers we can afford in a row would depend upon a couple of
things. If we were committing our entire trading capital to futures trading
I would give you one answer. Since our futures trading capital amounts to
approximately 30% (give or take a few points depending upon the day) of our
total investment capital I will give you a different answer.
My answer is based on experience with our system. Since we have years of
experience with our system, we have a general feel for the possible number
of times we might experience three losses in a row. We'd also need to look
at the number of times we experience a catastrophic loss where our margin is
wiped out. Since those catastrophic losses are rare (thank you!) and with
three consecutive losses never occurring in the past 15 years, we feel quite
comfortable trading at our 33% level.
Since we have plenty of previous experience getting wiped out in the past :)
(through aggressive trading and operating at a 50% investment level) and if
it happens again, we'll drop another $100,000 into the accounts and start
over. This is what we did a little over a year ago prior to our getting
religion and discovering money management. Hallelujah! :)
Hope this explains our mindset.
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 4:24 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Risk of Ruin
In a message dated 07/11/2000 8:34:09 PM Eastern Daylight Time,
grt@xxxxxxxxxxxx writes:
<< As long as we can maintain that 75% historical average
of being right, we'll continue with the 33% number. >>
75 % winners does not answer the question of string of losers. How many
losers in a row can you afford?
Jean Jacques
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