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Jean Jacques,
Most textbooks use that 3% figure when discussing Vegas gambling and other
random events. That's where I first saw it.
I made most of my other comments in another post. In terms of our trading,
we're always in the market. Long or short, right or wrong, but always in.
Now last Friday I did close my stock positions in the afternoon, but did
hold onto my futures positions which I reversed on Monday. We average a
trade every two weeks. In terms of size of trade, we make Schwab's' $14.95
rate after one trade in a quarter.
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: Tuesday, July 11, 2000 6:19 AM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Risk of ruin, amount per trade formula?
Guy;
I definitely don't get it: if you risk 33 % of your capital on each trade,
if
you have three losers in a row you are dead. 3% is not a number that has
been
picked up randomly . If you test a system with 3, 4 or 5% you will get
differrent drawdowns (with 33% you are going to have a drawdown of 100% very
quickly) and you will choose the one you feel confortable with knowing that
the worst is always to come. You drawdonw will bve a fonction of you edge
per
trade but also of the frequency of you trade. A 5% risk may , in some cases
be acceptable if you trade unfrequently.
We are very far from the initial margin.
Jean Jacques
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