RE: Risk of Ruin

["Guy Tann" <grt@xxxxxxxxxxxx>]

Kent,

Thanks.  We have well over 40 years of trading behind us.  Some good and
some really poor, just like everyone else.  Our current system has been
tested and traded for 15 years now and has been tweaked so that it appears
to work quite well.  As long as we can maintain that 75% historical average
of being right, we'll continue with the 33% 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 Kent Rollins
Sent: Tuesday, July 11, 2000 8:34 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Risk of Ruin

I think the texts that recommend risking 2% per trade are recommending that
as a guideline for discretionary trading and for beginning discretionary
trading at that.  After you've survived as a discretionary trader for a
while, you should have a better idea of how much you can comfortably risk.
Since Guy has a system which a couple of years of data, he can compute an
expected return (with a certain amount of error) and he has a good idea of
how successful any given trade will be.  With this information, he can
compute his "risk of ruin" (with a certain amount of error) and size his
bets so that he maximizes gain with a "risk of ruin" that he is comfortable
with.

Kent


-----Original Message-----
From: Sonnysark@xxxxxxx <Sonnysark@xxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Tuesday, July 11, 2000 2:28 AM
Subject: Risk of Ruin


Guy,

1)  If I understand you correctly you are risking 33% of your portfolio
balance in any signal position.  Most of the reading I've done on money
management calls for using anywhere from 2% to 10% of ones account in any
signal position. I know you stated that you use to use 50% of your account
and discovered that your system did better when using 33% of your account on
any signal trade.  I was wondering if you have tested any of the lower
figures such as 10% with your system?  And if so how were your results in
comparison to 33%?

2)  Would someone post the mathematical formula for figuring out the
profit/lost ratio for a system.  I haven't used it for a while and haven't
been able to find it.  Thanks to all.

Happy Trading,
-Sonny-