Confessions Of A Rapa User Diary

[mickson]

Thank you I love to hear it. What we are working on right now is enabling the user to change the list of countries I have used.
I also feel I can provide a lot more on the analytical tool side of things. Just not sure where they time flies, but there will be more releases to come in the near future.
Mike

 

[mickson]

Time to be alert, the more I look at the VIX the more complacency I see out there. I am already long the VIX via the ETF VXX. I think it is time to fire some more rounds out there to get a stronger position going.

Note to myself, I should include mean and median in these tables.

What I think is very worthy of mention is the rolling 30 day window of the volatility on the volatility. This looks ready to turn back up from a strong downward oscillation.

 

[Ghost of Cutten]

Quote from mickson:

The market continues to drift higher, DOW 13,000 close is in the bag. A sharp correction awaits.

In your trading, do you focus more on making market calls, then betting big and hoping they are correct? Or do you focus more on how to minimise the downside if you are wrong, planning for multiple potential outcomes, and adjusting your positions in line with changing market developments?

The reason I ask is that every single trader I have seen who has large drawdowns, comes from the former category. You seem to be focused solely on the scenario you expect to happen - this leaves you unprepared and vulnerable if an alternative scenario develops. The way to manage drawdowns is to plan for being wrong on each trade, rather than to assume you will be right. Maybe shifting your thinking from making hail mary market calls, to making probabilistic bets, thinking in terms of contingencies and multiple possible scenarios, could improve your returns and reduce your risk.

 

[mickson]

Quote from Ghost of Cutten:

In your trading, do you focus more on making market calls, then betting big and hoping they are correct? Or do you focus more on how to minimise the downside if you are wrong, planning for multiple potential outcomes, and adjusting your positions in line with changing market developments?

The reason I ask is that every single trader I have seen who has large drawdowns, comes from the former category. You seem to be focused solely on the scenario you expect to happen - this leaves you unprepared and vulnerable if an alternative scenario develops. The way to manage drawdowns is to plan for being wrong on each trade, rather than to assume you will be right. Maybe shifting your thinking from making hail mary market calls, to making probabilistic bets, thinking in terms of contingencies and multiple possible scenarios, could improve your returns and reduce your risk.

Not sure if you read my opening post to the thread. I mention there that I have been naughty in this account. I have taken big macro bets and therefore incurred significant drawdown from the high-watermark. I am a professional trader and have made my living trading since 2002. As you will probably agree traders/fund managers are opinionated people, especially ones who are not trading a mechanical system with predefined entry and exit rules. So this account has been one such avenue for that voice.

Coming back to the task I set out to achieve in this thread, yes I am now very focussed on the risk and as a fund manager this is what I am trained to do, take care of downside the upside will take care of itself. For whatever reason I am no longer swinging for the fences in this account.

As per your comment "making hail mary market calls" I don't know how you can infer this from my statement that "a sharp correction awaits" the market S&P500 had been up probably 43 straight days when that comment was made without a single correction greater than 1%. I made no mention of the time frame I was basing my correction call on or what I meant by sharp.

On the issue of making more "probabilistic bets" this is exactly how I/we design our bets. We are a team of 3 Ph.D's (1 Economic & 2 Math).

I don't wish to sound ungrateful and I do thank you for challenging me, as we all need to be bumped from our comfort zones. Give me some time for this journal to develop it has been 2 weeks, early days, I have held positions for not months but years, even options that long and made money on some of them

Good luck.

 

[mickson]

good day.

 

[1a2b3cppp]

I've never heard of RAPA before. Can you explain what some of the things on your screen mean?

 

[mickson]

Hi it stands for risk and profit analyzer. It is a free dashboard I have designed. You can understand more on www.rapadashboard.com and give it a try.

 

[Ghost of Cutten]

Quote from mickson:

Not sure if you read my opening post to the thread. I mention there that I have been naughty in this account. I have taken big macro bets and therefore incurred significant drawdown from the high-watermark. I am a professional trader and have made my living trading since 2002. As you will probably agree traders/fund managers are opinionated people, especially ones who are not trading a mechanical system with predefined entry and exit rules. So this account has been one such avenue for that voice.

Coming back to the task I set out to achieve in this thread, yes I am now very focussed on the risk and as a fund manager this is what I am trained to do, take care of downside the upside will take care of itself. For whatever reason I am no longer swinging for the fences in this account.

As per your comment "making hail mary market calls" I don't know how you can infer this from my statement that "a sharp correction awaits" the market S&P500 had been up probably 43 straight days when that comment was made without a single correction greater than 1%. I made no mention of the time frame I was basing my correction call on or what I meant by sharp.

On the issue of making more "probabilistic bets" this is exactly how I/we design our bets. We are a team of 3 Ph.D's (1 Economic & 2 Math).

I don't wish to sound ungrateful and I do thank you for challenging me, as we all need to be bumped from our comfort zones. Give me some time for this journal to develop it has been 2 weeks, early days, I have held positions for not months but years, even options that long and made money on some of them

Good luck.

Yeah I did read all your posts on this thread. The reason for my comment is that it seemed like everything the market did, just resulted in you becoming more convinced of your trade; and you talked as though it was inevitable your position would be proven right, rather than that you thought it was an odds-on bet, but not a certainty. I think it's better to have a way that the market can falsify your position, and for the loss to be acceptable should this occur; I also think it's also better not to assume you are right, but rather to plan for being wrong.

Are you trading to make money, or trading so that you can enjoy being undisciplined? I know discipline can be a pain in the neck sometimes.

 

[mickson]

Quote from Ghost of Cutten:


Are you trading to make money, or trading so that you can enjoy being undisciplined? I know discipline can be a pain in the neck sometimes.

We all have our demons, I think you will be a good policemen for me if I start slacking with my discipline.

Thanks for your comments

 

[mickson]

If this is the top of the current wave higher then we should see a lot more downside.