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> It has been proved again and again
> that risking too large portion of trading
> capital per position will eventually
> cause even the most profitable trading system to fail.
Of course. Which means that you should be well capitalized before you
start trading and very conservative in determining bet size. Reducing
size AFTER you have experienced a big loss is closing the door after the
horse has already left the barn. Never should have been trading that big
in the first place.
> Of curse down sizing
> the bet after a drawdown makes the recovery slower but it avoids the ruin.
Not necessarily. You can't go below one contract. If you were trading so
aggressively that you wiped out most of your account, there is no
guarantee that you won't get a margin call on your one lot trade.
> I
> have been in this biseness for more than 25 years and one of the reason
> small
> accounts NEVER survives it's because they are unable to size their bets:
> it's all or nothing.
Again, they were trading too big (a one lot) for the size of their
account. Someone with ten times the account size would have no problem
trading a one lot and surviving even though he was trading "constant
size." Some people use "I'll just reduce my size" as an excuse to trade
too big in the first place. Most times, they would be better off trading
much smaller.
--
Dennis
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