House Money
- Thread starter EpiphanyTrading
- Start date
Quote from Vienna:
Thank you for your polite and intelligent reply. Have an efficient day
I was going to reply with something more substantial
but your plan came straight out of the
"The New Robots guide to risk management"
I don't know how you would manage a parabolic position like that.
Sometimes the amount of capital you can afford to lose doesn't really matter, when the opportunity is incredibly skewed in one direction, you bet the farm and roll it.
fixed losses are not the way to roll it.
unless you want to end up with a 300 share lot size on a parabolic move, but at that point its ,like why bother even watching it.
So what do you tell people--have you been able to come up with anything that does not make them shrug and look at you oddly?
When I am asked this, I concede that it's gambling for anyone who does not understand what they are doing. But I can't explain the difference in a sentence or two.
EpiphanyTrading
ET Sponsor
I tell them that when I make money 19 day a month, consistently, it is not gambling.
ET illustrates beautifully why so many traders struggle to hold on to "their" gains. What you make trading is yours... and what you lose was yours. Every dollar is real. If you are consistantly green 17-19 days per month you have made it. If not; keep working at it.
+1
this is how i have managed outlandish returns these past 5 years
If you're managing peoples money in real life, you can't create any kind of "optimal" bet size that will slingshot you through a drawdown.
As you increase the trading size, in general you water down the levels of absolute risk and positive risks associated with your edge, and you have to become more concerned with either generating an income stream, or something of a more unique nature - like an asset class or returns generated by uncorrelated risks to traditional long only portfolios.
There is no way around dealing with clients who want absolute returns, steady earnings etc... the conflict lies in the fact that absolute returns, in order to be uncorrelated with the clients existing capital, require trading through volatile Markets, long periods of losses, all of which are characteristics of these alternate asset classes.
But to naively assume that there is some bet size method you can deploy at any given spot along the equity curve is akin to fool's gold.
As you increase the trading size, in general you water down the levels of absolute risk and positive risks associated with your edge, and you have to become more concerned with either generating an income stream, or something of a more unique nature - like an asset class or returns generated by uncorrelated risks to traditional long only portfolios.
There is no way around dealing with clients who want absolute returns, steady earnings etc... the conflict lies in the fact that absolute returns, in order to be uncorrelated with the clients existing capital, require trading through volatile Markets, long periods of losses, all of which are characteristics of these alternate asset classes.
But to naively assume that there is some bet size method you can deploy at any given spot along the equity curve is akin to fool's gold.
The house always gets its money back, that being said, it's definitely worth taking a little more risk when you are in control of some "house money". One must strike while the iron is hot because you never know what the next trading day will bring. This is when you use wider stops and let your profits soar.
That does not explain anything to the uninitiated.
For them there is no difference between you and the professional gambler who also makes money consistently.
The difference is statistical probability and approach, and that is what needs to be explained.
For them there is no difference between you and the professional gambler who also makes money consistently.
The difference is statistical probability and approach, and that is what needs to be explained.