Dark underworld of forex trading: "A-books" and "B-books"

[i960]

I'd say start reducing size if you're on a relentless losing streak that you don't understand the root cause of. I totally get the 1% a day thing - but if you're 2 weeks into this you have to stop and reflect.

 

[loyek590]

2

I'd say start reducing size if you're on a relentless losing streak that you don't understand the root cause of. I totally get the 1% a day thing - but if you're 2 weeks into this you have to stop and reflect.

2 weeks? It takes me two weeks, sometimes two months just to get it all on. I always understand the root cause of my loss, it's because I guessed wrong. I never have to reduce size because I have counted the cost of war before I ever go in.

but one of these days, if you keep doing what you have been doing, all you will have to show for yourself is how much of your trading profits you were able to save and invest.

 

[marketsurfer]

I'd say start reducing size if you're on a relentless losing streak that you don't understand the root cause of. I totally get the 1% a day thing - but if you're 2 weeks into this you have to stop and reflect.

The smaller you get, the harder it is to make it back--- not to mention the number of winning trades increase dramatically. Remember, after a 50% drawdown, a 100% gain is required to get back to even---

 

[i960]

The smaller you get, the harder it is to make it back--- not to mention the number of winning trades increase dramatically. Remember, after a 50% drawdown, a 100% gain is required to get back to even---

Yes, I get that, but if you're hemorrhaging you stop what you're doing.

 

[loyek590]

Yes, I get that, but if you're hemorrhaging you stop what you're doing.

you should have known there was a possibility of hemorraging before you ever went in. OK, now stop at the bottom at the depths of drawdown, get flat and start over. Only, next time you start out all over again fresh with a new method, you will have a smaller starting account.

hemorraging is just part of trading. If you don't like it, you are normal. I hate hemorraging. But if you can't take it, take up knitting. www.knitting.com

 

[i960]

hemorraging is just part of trading. If you don't like it, you are normal. I hate hemorraging. But if you can't take it, take up knitting

Disagree. It's a sign of bad risk management and overconfidence. What exactly is wrong with "whatever I am doing is not working for me right now - I need to stop and reflect on what is going wrong." ? It's just common sense. If what you are doing is not working, stop and figure out why BEFORE -30%. How about stop the drawdown at -10%?

 

[loyek590]

no trading strategy you ever designed when you were flat and of sound mind and body is so bad it should be abandoned at the depths of drawdown. Most likely, the strategy is still cool, and you are freaking out. 99% of these strategies won't make you money, but they won't abandon you at the depths of drawdown like you might do to them.

 

[i960]

You just said yourself you were up 30% and now are down 30%. So how is said strategy actually making you money?

 

[kut2k2]

You guys are funny. This is why I emphasize proper sizing. You only get small during a drawdown. Once you start winning again, you increase trade size again. This is all automatic if you use the Kelly formula I supplied.

 

[loyek590]

Disagree. It's a sign of bad risk management and overconfidence. What exactly is wrong with "whatever I am doing is not working for me right now - I need to stop and reflect on what is going wrong." ? It's just common sense. If what you are doing is not working, stop and figure out why BEFORE -30%. How about stop the drawdown at -10%?

because you are not of sound mind and body at that point and not capable of making a clear rational decision about anything, let alone your trading strategy.