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Is there a formula that can figure out what the maximum number of consecutive losses your system can have?

I heard guys who average down blow up sooner or later.( LTCM, Barings Brothers and Sumitomo Copper.)

Yep. Came to the same conclusion. It's because it has higher win-rate right? So the higher the win-rate your system has, the smaller the size of consecutive losses?

Worst case scenario you get 11 losing trades in a row and lose 20% of account.

Lol. I think I know where the 2% rule comes from now. ;-) Losing 2% on 5 trades in a row equals roughly 10%.

I just compared volatility of both of them and the 60% is less volatile! (I risked 10% for both systems so the comparison could be accurate)

Yep, thats why I think people don't use Kelly criterion. I thought about it and I wouldn't want 1 bad trade to take out 25% of my account.:-) It boils down to what is your maximum tolerable drawdown. For me worst case scenario would be 5 losing trades in a row and I would tolerate losing maximum...

Also another thing is that the optimal bet size for the 60% system is 25% while for the 40% is 10%. So the 40% system would have a less volatile equity curve?

Another thing is that I heard that most professional traders would go with the lower win-rate system because it is more "robust". Everything is good in theory, but a real live test would be best.

Ah you came up with the formula yourself nice.;-)

Woah, where did you get this formula and what's it called? I also figured out that the 60% system is better but by doing it the hardway by doing 100 theoretical trades in excel and comparing the results. I was thinking since the calculated "edge" of both systems is the same but the 60% makes...

Which system is better, 60%winrate/1:1RRR or 40% Winrate/2:1RRR? They should make the same amount right?;-)

It's simple. There was no liquidity in that area. Why is there no liquidity there? Now that is the question.

Same here. Took me a while to realize it. It's death by a thousand cuts. No risk, no reward.

Still buying usdtry?:D

LOL!

SPY Volume 35M, average 114M

Cool. We'll see how tomorrow is. Market closes at 1 Eastern.

Hi. Is it worth trading the week of Christmas & New Years? Is the market dead or can it still be traded?

Ok I read the next chapter of the book and I understand what he means. If it's a bull market look only for longs.