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Gary,
> I realize this is a philosophical difference, but I don't see how you
> can ignore the difference in risk between a well-chosen entry and a
> coin toss.
Only because I was focusing on the exit. Give me a well-chosen entry over a
coin toss any day. And if that well-chosen entry doesn't work, give me a
exit that is tied to how much I an willing to lose/give back on a trade.
> I'm much more interested in TOTAL DRAWDOWN than I am in risk per
> trade. I accept fairly painful bail-out stops on my systems because
> I know that creates the best results in the long term.
I'm assuming your interest in total drawdown comes from having to deal with
clients who want to know why their account stands at $x which is down from
some highwater mark $x+ regardless of the fact that it may have been
unrealized. You have to give them a smooth equity curve in the short term
even if they talk about long term results. Doesn't risk per trade
cumulatively translate into drawdown? If you have an incredibly high win
ratio, I guess it doesn't matter too much. But you never know when that win
ratio is going to evaporate.
I'm not sure what you're using for exits but you've only mentioned bail-out
stops. If you are going to avoid drawdowns, then your exits must be such
that they amount to risk-defined stops.
Season's best,
Mike
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