A message to some day traders.

padutrader said:
Let us return to Warren Buffett. He did not make his billions by cost benefit analysis, rather, simply by establishing a high filter, then picking opportunities that pass such threshold. “The difference between successful people and really successful people is that really successful people say no to almost everything.” He wrote. Likewise our wiring might be adapted to “say no” to tail risk. For there are zillion ways to make money without taking tail risk. There are zillion ways to solve problems (say feed the world) without complicated technologies that entail fragility and an unknown possibility of tail risks.
Taleb

he says do not take tail risk.

but why should he decide what risk i should take?

there are people who will take any risk provided they may get a particular reward for that particular risk.

for example i took a risk of 7000 usd -my account size and made 50000.

that may seem ridiculous for many traders...but in the end it is my decision

you should be clear about the risk that is being taken

some people have no idea what risk they are taking they focus only on the reward
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He’s advising you to not take tail risk because the longer you’re exposed to such risk, the likelier it is to materialize and ruin you. You see? This is a statistical fact.

Denying it would be signaling arrogance.

I’ve also made trades that have netted me hundreds of thousands but I was very lucky. I was taking on massive tail risk and survived. Looking back to that time, I was foolish, not skilled nor intelligent.

padutrader said:
some people have no idea what risk they are taking they focus only on the reward
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It’s ironic you say this.

Let’s leave everything on a agree to disagree/good note and just move on...
 
Amahrix said:
Prior to Feb 6th, when the inverse VIX crated 85%, traders saw a trend and bought in, only to get decimated the following day.

As Nassim Taleb, your arch-nemesis puts it, a trend is not a well defined thing. I couldn't have said it better, i agree with him.


vix-chart.png
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What if... you had a stoploss at 120. It's trading not holding.
 
Heydrrich said:
What if... you had a stoploss at 120. It's trading not holding.
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Stop loss doesn’t guarantee that you will sell at that specific price but that it will turn into a market order once it hits that price. Stop loss shouldn’t be categorized as a defined risk tool.

I covered this more in the thread. If you’re going through it, you’ll run into it.
 
Amahrix said:
Stop loss doesn’t guarantee that you will sell at that specific price but that it will turn into a market order once it hits that price. Stop loss shouldn’t be categorized as a defined risk tool.
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So... if theoretically a stop loss could be categorized as a defined risk tool (for argument sake), your whole argument would fall to pieces ?
 
Heydrrich said:
So... if theoretically a stop loss could be categorized as a defined risk tool (for argument sake), your whole argument would fall to pieces ?
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No. Defining risk in a trading strategy is one piece of the puzzle.

Edit: kindly, this also needs a little more context. This thread has diverged into multiple arguments so I don’t know which argument you’re talking about. If you can clarify which argument it is, I can further clarify my comment.
 
padutrader said:
that is sensible

it all boils down to what risk you want to take.......yes it may be more than Taleb may take .....or what Soros may teke
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Taleb et al will be the first to tell you to take all the risks you want to take but to make sure you show up tomorrow. (Implying take all the risks but tail risks... so you can survive to then show up tomorrow).
 
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