There is no argument to be had. I am stating fact. I expect the majority to disagree and discount it. However, it is fact. PRM is the only edge available to the retail trader--period.
How simple are professional trader's strategies?
- Thread starter iamnewuser911
- Start date
OK, so if I prove it to you that I have a fairly decent profitable strategy WITHOUT any money management, would you call your statement incorrect?
You'd be showing your level of foolishness.
Risk management is a necessity to survive... but it doesn't generate ideas.
Ideas potentially generate alpha... which in combination with sound risk management generate profitable trades.
Just having a good risk management without any ideas, that's just gambling... flipping a coin with the added negative of transaction costs...
Theoretically, when you're just trading this way, 50:50 in direction... and your risk management hopefully kicks in with stoplosses at less costly than letting profits run. But, if you are in a sideways market which doesn't move much... than I'm pretty sure you're not going to be able to be profitable.
Therefore... your alpha generation will be in hitting the trends... so even with 50:50 you're profits can be run-up in a decent way.
So... in the end.... you still need to generate some kind of alpha by finding the trend....
@Buy1Sell2 is wrong... and @sle and @Pekelo are right... I rest my case....
Ideas potentially generate alpha... which in combination with sound risk management generate profitable trades.
Just having a good risk management without any ideas, that's just gambling... flipping a coin with the added negative of transaction costs...
Theoretically, when you're just trading this way, 50:50 in direction... and your risk management hopefully kicks in with stoplosses at less costly than letting profits run. But, if you are in a sideways market which doesn't move much... than I'm pretty sure you're not going to be able to be profitable.
Therefore... your alpha generation will be in hitting the trends... so even with 50:50 you're profits can be run-up in a decent way.
So... in the end.... you still need to generate some kind of alpha by finding the trend....
@Buy1Sell2 is wrong... and @sle and @Pekelo are right... I rest my case....
I'd disagree with that. I love sideways markets and I'm only slightly better than a coin-flip in getting direction (and don't even talk to me about getting magnitude right). My stops will mean a larger loss than the position's maximum profit. And the strategy is profitable. It's purely dependent on managing risk on high probability positions and diversifying sufficiently that no one position can ruin a week while countering certain market-wide moves. It's nothing more than limiting losses while being there to take the winners as they come.Just having a good risk management without any ideas, that's just gambling... flipping a coin with the added negative of transaction costs...
Theoretically, when you're just trading this way, 50:50 in direction... and your risk management hopefully kicks in with stoplosses at less costly than letting profits run. But, if you are in a sideways market which doesn't move much... than I'm pretty sure you're not going to be able to be profitable.
@Buy1Sell2 is wrong... and @sle and @Pekelo are right... I rest my case....
Sadly, you don't have a grasp on what Prudent Risk Management is.Risk management is a necessity to survive... but it doesn't generate ideas.
Ideas potentially generate alpha... which in combination with sound risk management generate profitable trades.
Just having a good risk management without any ideas, that's just gambling... flipping a coin with the added negative of transaction costs...
Theoretically, when you're just trading this way, 50:50 in direction... and your risk management hopefully kicks in with stoplosses at less costly than letting profits run. But, if you are in a sideways market which doesn't move much... than I'm pretty sure you're not going to be able to be profitable.
Therefore... your alpha generation will be in hitting the trends... so even with 50:50 you're profits can be run-up in a decent way.
So... in the end.... you still need to generate some kind of alpha by finding the trend....
@Buy1Sell2 is wrong... and @sle and @Pekelo are right... I rest my case....
Ah... @Buy1Sell2... a true troll... or a sour grape... probably both.
How did you come to your conclusion that I don't know what prudent risk management is? 50:50 guess?
But high probability positions mean you are targeting a bit of alpha... that's your aim. And on top of that, risk management to keep it in check...
A bit generous to the bell curve to characterize it as alpha, don't you think?
A bit generous to the bell curve to characterize it as alpha, don't you think?
Yeah maybe... but at least you're trying to make decent money this way... more than just buy-and-hold...? Or are you just playing around
