Quite a good life then, I love it
Can money management alone create any edge?
- Thread starter Ricter
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Quite a good life then, I love it
Quote from science_trader:
Quite a good life then, I love it
yeah a very good life!!! hawaii!!! wish i could trade from there and not in shitty weather London!
I wouldn't have choosen Hawaii personally, but anyway, it's effectively better than London. Actually a lot of places are better than London
Quote from science_trader:
I wouldn't have choosen Hawaii personally, but anyway, it's effectively better than London. Actually a lot of places are better than London
Where do you trade from? Bahamas?
Mainly Switzerland. On my way to organize something from Sicily for the summer. Nothing precise yet.
Bahamas ? Not really my style too.
Now this is a little more confusing or the term Money Management is just too generic...
I've heard this definition before but being applied to the term Risk Management.
Therefore, we have three terms in this thread that seems to be a blur into each other:
* Money Management
* Position Size Management
* Risk Management
I'm sure the MBA types on this board and hopefully in this thread can define the above based on text book definitions.
I personally think there's a difference between Position Size Management and Risk Management.
Example...I'm only willing to risk a particular percentage of my overall account size on any trade.
Within each trade...I adjust my position size (contracts) accordingly to market conditions while never exceeding that risk level (% of my account size) whenever I go heavy on the large size.
NihabaAshi
Hi All,
Looking back at a the last few pages of this thread, it is evident that orderly discussion is at best tenuous. This corresponds pretty much to my view that like many other popular gimmicks discussed at ET, Money Management is certainly one of the more fuzzy ones. Several times in the past I have been compelled by my nononsense-itch to post along these lines.
According to some, it's akin to a rabbit's foot enabling one to squeeze a profit out of a 50/50 or even out of a random entry illusion. In fact lengthy threads have already dealt with the art of "random entry" trading. Some, I believe, even wondered whether in this mode, exits have to be random as well!
Some helpful souls have made an attempt to "define" things a bit more.
ET's own expert definition hustlers being too busy in their Chit-Chat arenas, one can only fall back on the standard sacred cow authors to quote from (extensive lists are also carried in specialized threads).
nononsense remains very skeptical about the whole thing. I believe that successful speculation strategies require that you put everything in one and the same pot: edge, money management, stops, you name it. Of course you can and have to bring some structure into all this for your own sanity's sake. This is very difficult to share though. This point has been brought up many times in the past. Why teach others your hard fought for subtle little edge with the almost certainty of seeing it melt away. Indeed, maybe the best way to protect our edges is to keep fanning the flames of "Money Management" to keep our prime benefactors busy feeding our little edges.
Be good,
nononsense
Looking back at a the last few pages of this thread, it is evident that orderly discussion is at best tenuous. This corresponds pretty much to my view that like many other popular gimmicks discussed at ET, Money Management is certainly one of the more fuzzy ones. Several times in the past I have been compelled by my nononsense-itch to post along these lines.
According to some, it's akin to a rabbit's foot enabling one to squeeze a profit out of a 50/50 or even out of a random entry illusion. In fact lengthy threads have already dealt with the art of "random entry" trading. Some, I believe, even wondered whether in this mode, exits have to be random as well!
Some helpful souls have made an attempt to "define" things a bit more.
ET's own expert definition hustlers being too busy in their Chit-Chat arenas, one can only fall back on the standard sacred cow authors to quote from (extensive lists are also carried in specialized threads).
nononsense remains very skeptical about the whole thing. I believe that successful speculation strategies require that you put everything in one and the same pot: edge, money management, stops, you name it. Of course you can and have to bring some structure into all this for your own sanity's sake. This is very difficult to share though. This point has been brought up many times in the past. Why teach others your hard fought for subtle little edge with the almost certainty of seeing it melt away. Indeed, maybe the best way to protect our edges is to keep fanning the flames of "Money Management" to keep our prime benefactors busy feeding our little edges.
Be good,
nononsense
FredBloggs
Guest
well, here's a teaser:
if you have a great edge and great trade management, do you even have to worry about money management?
surely youd just put say 10-25% of the ranch on each trade??? (depending on how good the edge & tm was)
does this suggest that mny mgt isn't such a holy grail some would like us to believe?
if you have a great edge and great trade management, do you even have to worry about money management?
surely youd just put say 10-25% of the ranch on each trade??? (depending on how good the edge & tm was)
does this suggest that mny mgt isn't such a holy grail some would like us to believe?
Mathematically at least, it has been shown that using optimal betting strategies will optimize return per defined unit of risk.
The key to the whole thing is a clear measure of risk and that is why it is such a fleeting slippery thing. Not everyone knows their risk going into a trade (although you might have a statistical approximation,) inspite of what the books tell you to do.
nitro
Thank you all very much for your replies, I've learned a good bit from this thread.
I'll disclose my motives at the risk of ridicule and/or moderation.
I've been sportsbetting and seem to have worked out an edge, I'm making money. But I have my doubts. Perhaps I'm in a lucky streak, and I'm really just playing at 50/50 (or worse, heaven forbid). But I am using a small percent of my capital, and I'm using a progressive betting method, like a modified Martingale (based on parleys) to keep the effect of losing streaks minimized and keep me in the game longer. I just got to wondering if I was deluding myself about the utility of my bet sizing method...
Still, these replies have helped enormously while I continue to study equity trading, which I hope to do when I have more capital.
I'll disclose my motives at the risk of ridicule and/or moderation.
I've been sportsbetting and seem to have worked out an edge, I'm making money. But I have my doubts. Perhaps I'm in a lucky streak, and I'm really just playing at 50/50 (or worse, heaven forbid). But I am using a small percent of my capital, and I'm using a progressive betting method, like a modified Martingale (based on parleys) to keep the effect of losing streaks minimized and keep me in the game longer. I just got to wondering if I was deluding myself about the utility of my bet sizing method...
Still, these replies have helped enormously while I continue to study equity trading, which I hope to do when I have more capital.