|
PureBytes Links
Trading Reference Links
|
No!
I work for myself. Actually, although it is rather off the subject, I use
the 80/20 principle extensively when developing business strategies for
major European corporations. It happens to apply equally to trading.
Simon
-----Original Message-----
From: David Andrews <david_s_andrews@xxxxxxxxxxx>
To: UKTrading@xxxxxxxxxxxxx <UKTrading@xxxxxxxxxxxxx>
Date: 15 August 1998 20:17
Subject: Re: SMARTTRADING...YEA RIGHT
>
>Do you work with Larry Williams?
>
>
>>From owner-realtraders@xxxxxxxxxxxxxx Sat Aug 15 01:20:01 1998
>>Received: from localhost (localhost [127.0.0.1])
>> by accessone.com (8.8.5/8.8.5/PIH) with SMTP id BAA21701;
>> Sat, 15 Aug 1998 01:18:00 -0700 (PDT)
>>Received: from UPIMSSMTPUSR03 ([207.68.143.159])
>> by accessone.com (8.8.5/8.8.5/PIH) with ESMTP id BAA21042
>> for <RealTraders@xxxxxxxxxxxxxx>; Sat, 15 Aug 1998 01:09:51 -0700
>(PDT)
>>Received: from rock-mentor - 193.149.75.167 by email.msn.com with
>Microsoft SMTPSVC;
>> Sat, 15 Aug 1998 01:09:29 -0700
>>Message-Id: <006301bdc823$bdb97360$a74b95c1@xxxxxxxxxxx>
>>Date: Sat, 15 Aug 1998 09:06:39 +0100
>>Reply-To: UKTrading@xxxxxxxxxxxxx
>>Sender: owner-realtraders@xxxxxxxxxxxxxx
>>From: "Simon Townshend" <UKTrading@xxxxxxxxxxxxx>
>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
>>Subject: Re: SMARTTRADING...YEA RIGHT
>>X-To: "RealTraders" <RealTraders@xxxxxxxxxxxxxx>
>>X-Priority: 3
>>X-MSMail-Priority: Normal
>>X-Mailer: Microsoft Outlook Express 4.72.3110.1
>>X-MimeOLE: Produced By Microsoft MimeOLE V4.72.3110.3
>>X-Listprocessor-Version: 8.1 -- ListProcessor(tm) by CREN
>>
>>There is some interesting discussion going on here about money
>management.
>>As someone who knows Ryan Jones (who is Rumery & Lehman) I thought you
>might
>>like some answers and a slightly different insight:
>>
>>Firstly do you need to spend $1500 on the software? Well that depends
>on
>>how you value your time. If quite some hours of your time developing a
>>similar application is worth more to you than that, then consider
>buying it.
>>If you have more time on your hands and less money build your own. It
>is
>>relatively straightforward just using Excel and a bit of Visual Basic -
>if
>>you have the time! All of the principles and equations can be obtained
>from
>>Ryan's video from Futures West which I think costs about $70 or
>something.
>>That is all you need to build your own.
>>
>>Secondly, and perhaps the most important aspect of fixed ratio is this:
>It
>>will NOT make a losing system make money. It may or may not make an
>average
>>system better (over the long term yes it will, short term is just down
>to
>>luck). A decent system or methodology it will set on fire!!!!
>>
>>Thirdly, to implement the correct fixed ratio to your trading you must
>>tailor the parameters to suit your system. If you have a very high %
>of
>>winners making small amounts you would select the numbers of contracts
>>differently to a system that makes huge amounts on a very low % of
>winners.
>>That is down to understanding the CONCEPT inside out and not just the
>>mathematics. Actually in a similar vein you should be wary of slippage
>and
>>commissions and make generous allowances when doing your analysis. If
>your
>>system is only making $100 per trade on average after S&C and you are
>not
>>getting the figures spot on you will spend your life oscillating back
>and
>>forth between 1 and 2 contracts.
>>
>>Overall I consider Fixed Ratio to be a good simple concept that has
>been
>>expanded and embellished so as to command the high prices that we all
>see.
>>However consider this. 90% of your earnings potentially come from
>selecting
>>the number of contracts to put on each trade and not selecting the
>trade
>>itself. Yet the really hard bit, in my experience, is selecting the
>damn
>>trade to start with!! This is a classic example of Pareto's 80/20 Law:
>20%
>>of the effort generates 80% of the rewards, whilst 80% of the effort
>>generates only 20% of the rewards. That really is spot on it this
>case.
>>
>>You might deduce from this that I am in favour of Ryan Jones and his
>Fixed
>>Ratio techniques. Well yes I am now. The operative word in that last
>>sentence is NOW. Until you have a system / methodology that produces
>decent
>>and consistent profits you do not even need to worry about all of this.
>>Carry on working to get to the point where your 1 lot is bring you in a
>>regular weekly wage. Then and only then does all of this become
>relevant
>>and by that stage you will not worry too much about paying premium
>prices.
>>
>>In case you were wondering, I have been in touch with Ryan Jones for
>some
>>time now. I am paying him rather a lot of money for him to work with
>me and
>>yes it is worth it as I can already see the Pareto principle at work in
>>practice rather than just theory.
>>
>>Hope that adds something to the debate!
>>
>>Happy trading
>>
>>Simon
>>
>>
>>
>>
>
>
>______________________________________________________
>Get Your Private, Free Email at http://www.hotmail.com
|