If you say that then many losers on the market can just say the same "I've been a victim of a bad break from a macro standpoint"
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Now I don't dismiss turtletrader system, as I don't dismiss Larry William but I repeat once again it is a martingale system : when you say "we MAY now be" etc... the problem is the CONDITIONAL what if we MAY NOT ? Are you ready to lose six figures number like Rearden Metal with Dennis, Larry William, whoever you want (because I 'm not fixing on Dennis especially) when you know that they use a martingale ? I mean if you are ready to accept then yes go but don't whine if it doesn't work since you have been notified that it can be risky.
About martingale and risk/money management:
http://www.elitetrader.com/vb/showt...e=6&highlight=martingale and sub&pagenumber=2
Money Management is noble term for position sizing which is basically leverage. Leverage by definition is multiplication of the effect, positive or negative. In a casino game the player will vary this leverage with each bet and the sequences of variation defines the so-called "strategy".
In a coin flipping game the expectancy will stay the same whatever "strategy" - sequence of variation of leverage including the so-called ANTIMARTINGALE RULE - that is to say ZERO if the coin is fair (which is reasonable to assume for a casino). Mathematically something that can give only ZERO EXPECTANCY whatever strategy is used is called MARTINGALE. Something that gives negative expectancy is SUPERMARTINGALE and positive expectancy is SUBMARTINGALE. I will detail later : as I said here
http://www.elitetrader.com/vb/showt...=6&pagenumber=6 I will make a thread dedicated to martingale. Stock market is not exactly like flipping coin in a casino : it has advantage over the casino (that's why I never go to a casino whereas I am in stock market : casino is a martingale/supermartingale except if the casino is idiot whereas stock market can be a submartingale).
There is 2 things to distinguish:
Risk management and Money Management in the restricted sense of optimisation (position sizing,..) used by Ralph Vince for example - the author of the classical "New Money Management". Of course there is some overlap between the two.
The most important one is the Risk Management because it relates to the alpha risk type in term of probability theory which is the risk of being in error whereas optimisation relates to the beta risk type which is only the risk of missing some opportunity. Missing opportunity cannot conduct you to go broke (although it should be modulated in details but I simplify here) whereas not knowing the alpha risk can get you broke.
People focus too much on Money Management thinking that it is the "secret" of wealth - perhaps because of sellers of books/systems which have interest to put the accent on Money management rather than on risk management. Yes you will see people who become rich suddenly because they applied martingale rule (BTW so called anti-martingale rule is also a martingale rule mathematically it is amusing how marketing tried to disguise to people things through fake name !) but what you see is the "survival bias" of chance that's why the same person when ruined later is incapable to reproduce the same exploit. Money Management is only useful when Risk Management is already under state control. Then it becomes easy to optimise that is to say use Money Management (using probability with or without Monte-carlo, Linear Programming).
In conclusion: "PREMATURE optimisation is the root of all evil"
It is in fact Knuth's famous maxim in software programming but as you can see it can apply to other field since Money management is about optimisation. Doing Money Management before doing the essential part of Risk management is also the root of all evil (it will conduct to overfitting and constant tweaking for example).
Quote from darkhorse:
I can't help but wonder if Mr. Dennis was the victim of a bad break from a macro standpoint.
