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Yes, risking less per trade is better. Ideally, you would want to have a
number of predictable systems that can be diversified across a number of
non-correlated markets so you can trade way away from "risk of ruin" or
"optimal f" or whatever is used to determine risk. How many systems and how
many markets do you trade, Mark?
Kent
-----Original Message-----
From: Mark Brown <markbrown@xxxxxxxxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Tuesday, July 11, 2000 5:45 PM
Subject: Re[2]: Risk of Ruin
Hello Kent,
KR> I think the texts that recommend risking 2% per trade are recommending
that
KR> as a guideline for discretionary trading and for beginning discretionary
KR> trading at that. After you've survived as a discretionary trader for a
KR> while, you should have a better idea of how much you can comfortably
risk.
This discussion interested me so I went back and and figured out what
my risk per trade is vs. margin set aside per model. It comes out to
about 6 percent per position. I am certainly considered a gun
slinger trader meaning high risk by some in the industry. So these
other higher numbers just reinforce what I have been thinking all
along - that exemplifies inexperience. That's what these traders
are doing - babbling out loud and beating their chest. 20% percent
per trade or more, yea right. A hardy har har from on top looking
arrogantly down. mb
KR> Since Guy has a system which a couple of years of data, he can compute
an
KR> expected return (with a certain amount of error) and he has a good idea
of
KR> how successful any given trade will be. With this information, he can
KR> compute his "risk of ruin" (with a certain amount of error) and size his
KR> bets so that he maximizes gain with a "risk of ruin" that he is
comfortable
KR> with.
KR> Kent
--
Best regards,
Mark Brown mailto:markbrown@xxxxxxxxxxxxx
Y = Offset + Amplitude * sin(Frequency * X)
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