"Earning the right to be aggressive" is BS, so is trading big on winning streaks

[marketsurfer]

the OP is correct. Nicely said. Another trading myth bites the dust.

remember ramping up size just because you are on a winning streak will cut you down fast when the streak ends--- no difference than martingaling in when losing--- same thing.

surf

 

[marketsurfer]

Quote from 1a2b3cppp:

Unless the odds of winning your next trade are somehow related to whether or not you won your previous trade, then position size should be the same.

just too logical. well said!

 

[eudaemon]

The corollary to this, moronic statement, is that adding to winners is BS as well. Of course the OP's statement is true only if position size is statically determined at entry and never changed during the course of the trade.

It also assumes that current and future trades will have close resemblance to past, modelled trades, which is of course idiotic since each trade and moment in the market is...unique. Similar, maybe, but different every time!.

Plenty of examples where people made, and kept, millions and sometimes billions doing the opposite.

 

[Daal]

The OP tatic can make sense(and have a better expectation on a relative basis) if the trader tends to be affected mentally by the equity curve and is doing discretionary trades. In that case changing size is similar to gamblers to tend to quite losing sessions or keep playing on winning sessions as a way to maximize expectation

It might also be useful if running OPM as people tend to feel profits are the 'house money' and be more forgiving of surrendering that compared dipping into losses(In a YTD basis), its irrational but they control the withdraws so the manager might have to accept that

 

[the1]

Your position is total BS and it demonstrates your complete lack of understanding about the markets and trading in general. If you are on a solid winning streak it means market conditions are highly conducive to your trading strategy and when those conditions are present your trading plan should be designed to incorporate a significantly larger than normal size. Period!

 

[jd7419]

Quote from Ghost of Cutten:

All that matters is the trade expectation characteristics on the current setup or open position. If a trade is a slam dunk, then it should be traded identically, regardless of the prior path of your equity curve, whether you are on a 10 trade winning or losing streak etc.

Getting 2:1 odds on a fair coin flip demands identical bet size, regardless of how many heads or tails came previously, whether you won or lost before.

The only way that a prior run can influence size rationally is when a bad losing streak calls into question the whole viability of a strategy. You may then think you have a good setup but in fact the market has changed and your setup sucks. But to conclude this, you must have a pretty long losing streak. The typical "push your winning streaks" trader sizes up to the max after a handful of winners, and cuts back after a handful (3 or 4 maybe) losers. This is totally irrational as 2, 3, 4 winners or losers in a row says nothing at all that would lead you to believe a setup has degraded or improved meaningfully.

Your equity curve displays almost no useful information about whether the current setup facing you is one that should be bet big, normal, small, or nothing at all. Size based on the current trade expectation from the current market price, and ignore any considerations that don't directly impact that assessment.

I disagree completely. I have been trading a long time and know that adjusting size based on feel is the best weapon I have. My results speak for themselves. Not to mention the best trader I know( the guy who owns t3live) does this all the time.

 

[the1]

"Earning the right to be aggressive"

The title of your thread also demonstrates your complete lack of understanding. Aside from a trader who has a boss that controls his/her size, no trader "earns" the right to increase size. Trading is about putting yourself in a position to take advantage of opportunity when it is presented to you and when the conditions are ripe you trade aggressively. There's nothing to be "earned" because such conditions are completely beyond your control.

 

[the1]

Another trait that most traders lack. The "feel" or the ability to "read" the markets intuitively also dictates your position size. Why will a trader take a trade and pass on a subsequent nearly identical setup? This is something I will do all the time. The answer lies in your intuitively ability to read or "feel" the markets.

Quote from jd7419:

I disagree completely. I have been trading a long time and know that adjusting size based on feel is the best weapon I have. My results speak for themselves. Not to mention the best trader I know( the guy who owns t3live) does this all the time.

 

[marketsurfer]

Quote from the1:

Your position is total BS and it demonstrates your complete lack of understanding about the markets and trading in general. If you are on a solid winning streak it means market conditions are highly conducive to your trading strategy and when those conditions are present your trading plan should be designed to incorporate a significantly larger than normal size. Period!

No.

. Streaks are evident in pseudo random data with no underlying conditions.

In addition, should the the streak happen to be caused by an identifiable underlying condition, there is no telling when the condition will reverse-- killing those who ramped up size at a multiple of the smaller gains.

 

[the1]

I completely agree Surf. A continuous move upward, or downward should that be the case, is most certainly a random moment but recognizing it when it occurs and when it ends is not the scientific part of trading; it's the artistic part and increasing size accordingly is appropriate. Additionally, there are tools at our disposal to help us make these decisions such as a measure of volatility. If high volatility is highly correlated to a rising profit curve then increasing size is appropriate. And when I mention tools to measure volatility I'm not talking about some as archaic as the ATR indicator. I'm talking about a tool that has more sophisticated data input and therefore, a more sophisticated output.

Quote from marketsurfer:

No.

. Streaks are evident in pseudo random data with no underlying conditions.

In addition, should the the streak happen to be caused by an identifiable underlying condition, there is no telling when the condition will reverse-- killing those who ramped up size at a multiple of the smaller gains.