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"...if you risk 33 % of your capital on each trade, if
you have three losers in a row you are dead...."
Need to re-think that one, Jean Jacques. In each trade
you are risking 1/3 of the remaining capital, not 1/3 of
the original capital amount.
Al Taglavore
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> From: Macromnt@xxxxxxx
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: Risk of ruin, amount per trade formula?
> Date: Tuesday, July 11, 2000 8:19 AM
>
> Guy;
>
> I definitely don't get it: 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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