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How to never get an account wiped out?
- Thread starter gg12
- Start date
Quote from gg12:
Will
I am trading % wise. I don't care about amounts.
What I am doing can be done with any amount!
The smallest bet I can make is only a tiny fraction of my account.
The problem is that I am trading with too big % trades which are not justified by an edge.
GG,
Honestly you don't really need an edge, or to me most people don't have one. It's the risk management (return > risk) and money management (position sizing or growth) that safe they arses.
I know you are aiming at a grow rate (%), but with your equity level bouncing all over the place, it's just not easy for a trader (ie, to avoid wipe out, then there is the emoitional issue).
Mathsmatics is one thing (ie, >1% chance of 7 loss in a role), but when you system is wrong for an extented period of time, and trades come up, that's how the market wipe people off, since you only have a provision for a certain amount of loss (expected DD).
Will
Will
My biggest mistakes is that I am still betting against trends.
I am somtimes just watching how a position runs against me and don't act to cut the loss.
But I am still sure that my account can't be wiped out...
... and will grow over time.
I need to develop further skills to be more on the positve side and reduce the time which trading is currently consuming.
My biggest mistakes is that I am still betting against trends.
I am somtimes just watching how a position runs against me and don't act to cut the loss.
But I am still sure that my account can't be wiped out...
... and will grow over time.
I need to develop further skills to be more on the positve side and reduce the time which trading is currently consuming.
Yesterday's result:
01/29/07 -4.8%
-----------------------------------------------------------------------
Average geometric growth over the last 18 trading days:
+3.2% per day
Average arithmetic growth over the last 18 trading days:
+4.2% per day
Win/Loose statistics of the recent 18 trading days:
6 loosing and 12 winning days
Average win size +14.1%
Average loss size -14.1%
% Win/Loss ratios is 1.0
Average Win/Average Loss = 0.70
According the Kelly criterion the optimal bet size is
K% = Win/Total - Loss/Total / Avg.Win/Loss
K% = 12/18 - 6/18/0.70
Optimal bet size (if chances are the same in the future) is
currently 19% of the account.
This means that I should not risk more than 19% of my account today (based on historical data).
01/29/07 -4.8%
-----------------------------------------------------------------------
Average geometric growth over the last 18 trading days:
+3.2% per day
Average arithmetic growth over the last 18 trading days:
+4.2% per day
Win/Loose statistics of the recent 18 trading days:
6 loosing and 12 winning days
Average win size +14.1%
Average loss size -14.1%
% Win/Loss ratios is 1.0
Average Win/Average Loss = 0.70
According the Kelly criterion the optimal bet size is
K% = Win/Total - Loss/Total / Avg.Win/Loss
K% = 12/18 - 6/18/0.70
Optimal bet size (if chances are the same in the future) is
currently 19% of the account.
This means that I should not risk more than 19% of my account today (based on historical data).
Quote from gg12:
Will
My biggest mistakes is that I am still betting against trends.
I am somtimes just watching how a position runs against me and don't act to cut the loss.
But I am still sure that my account can't be wiped out...
... and will grow over time.
I need to develop further skills to be more on the positve side and reduce the time which trading is currently consuming.
GG,
I stopped trading counter trend after my DD. Done some test excluding those trades, and came to the realisation that it's not that bad, it just grow slower. Give it a try, watch for reduction in risk (smaller average loss); you might be surprise that it's worth it.
Happy Trading.
Trend following is simply the best and easiest and stress-free (or lowest stress) trading i know. I do both trendfollowing and counter trend, but my best trades are trend-followers especially in last 2-3 years
http://lauristonletter.blogspot.com/
http://lauristonletter.blogspot.com/
lauriston
Will
I completely agree that trend following is the best lowest stress attached trading. If you are short an option with unlimited risk you know the feeling if the market turns against you.
I do both trendfollowing and counter trend as well. In this sense unfortunately also some of my best results are based on writing options.
I have good trades as trend-follower but I am taking profit too early.
If we have a bell curve with
10% huge profits
40% moderate profits
40% moderate loss
10% big losses
then I normally skip the 10% huge profit potential cutting trades into the 'moderate profits' area.
Yesterday I have made some very bad trades and the result was
01/30/07 -24.4%
Why? Mainly by working unprotected against trends and revenge trading.
I have to be very careful now, because my average growth has been dropping below my target of 2% gain per trading day.
I am now at only 1.5% profit per day.
I have accumulated 33% profit in the last 19 days.
But I am now more than 71% below my original bankroll (the money I deposited to my broker).
Will
I completely agree that trend following is the best lowest stress attached trading. If you are short an option with unlimited risk you know the feeling if the market turns against you.
I do both trendfollowing and counter trend as well. In this sense unfortunately also some of my best results are based on writing options.
I have good trades as trend-follower but I am taking profit too early.
If we have a bell curve with
10% huge profits
40% moderate profits
40% moderate loss
10% big losses
then I normally skip the 10% huge profit potential cutting trades into the 'moderate profits' area.
Yesterday I have made some very bad trades and the result was
01/30/07 -24.4%
Why? Mainly by working unprotected against trends and revenge trading.
I have to be very careful now, because my average growth has been dropping below my target of 2% gain per trading day.
I am now at only 1.5% profit per day.
I have accumulated 33% profit in the last 19 days.
But I am now more than 71% below my original bankroll (the money I deposited to my broker).
Quote from gg12:
01/31/07 -35.2%
02/01/07 +79.9%
Today I have made 3 writer plays and one breakout play with my best %-result for a single day so far.
Yesterday was a complicated trading day. I have made mistake after mistake...
Finally I am back at my 2%+ growth target on my 21th trading day.
GG,
Knowing your age and the way you trade, my guess is you are seriously undercaptialise to make this workable as the only source of income.
It took me 3 years in my early 20s to save for my stake, how I trade it's greatly effected. I would surely do counter trend trades on a larger equity base (maybe double), for the sake of smooth out the equity curve.
Having a 70%DD, 30% days (account wise), it means you are seriously undercapitalise for your size.
Word of advice, if you want to make this work,
1. Learn more/get better at Trade Systems, Risk Management, Money Management.
2. Get some extra funding from family. Show them that you are systematic, that you have an organised approach. You need the $ to have a large equity base. Once the snowballing, you know the rest...
3. Try to avoid over trading.
Cheers
Will