|
PureBytes Links
Trading Reference Links
|
Hi RTrs,
Ref: Caplan's brokerage house, the Italian friend of Giovanni losing a
bundle of money on Caplan's recommendation , I heard one similar account
about somebody else losing most of his account in 4 months - commissions
were very high.
About Tom Alexander calculation of ODDS strategy having negative
expectation, the calculation are right. You would have an average loss of $
160. I would put commission and slippage of $ 100 for a spread. So the
calculation goes as follows: You win $200 80% of the time minus commission,
slippage of $ 100 giving you $100, 80% of time, the other 20% of time you
lose $1400 plus $ 100(commission,slippage)= $1500.
.80x100-.20x1500 = $80-$300=minus $220 per trade.
After 10 trades, you would be out $2200 plus the cost of the seminar.
That is why, the size of your winner and loser is more important than the
percentage of the win. That is why the old adage -let your winners run and
cut your losers is so important in the world of profitable trading. At
times, I had 3 losers and 1 winner that more than makes up for the losing
trades.
Happy trading, Ashif
|