How to never get an account wiped out?

I can tell you that I would never do for a professional account what I did today. I have been taken big risk for a 50:50 chance. It's like flipping a coin. It is pure luck that I can report a gain for today. Telling you everything else wouldn' t be onest.

03/01/07 +7.3% (I really don't deserve that)

02/28/07 +5.8% (I deserve that, because I started with - 10% in the morning and was fighting the whole day to achieve the desired result).

Markets are extremely volatile (compared to the last 30+ sessions) and I nearly failed to adapt to the big move environment. Just see attached graphics for intraday movements for the INDU.
 

Attachments

Nice job recovering from the drawdown. Now take a breath and assess what happened. The problem with anti-martingale is you had to make 500% to recover an 80% drawdown.

I would suggest ..... if your original account size is 10k .... using fixed size when your balance is below 10k (use small enough fixed size that you are very unlikely to blow out). With balance above 10k, reward yourself by using used your fixed size + (amount over 10k leveraged to the max). You will still have the potential for runaway profits, but your drawdowns will be in a net profitable account.
 
programa

Thank you for your post.

I agree with you that it's very important to reward myself if doing a great job.

The process of trading is one of those rewards. I am allowed to trade with excellent yet affordable technology. I am allowed to trade anytime at anyplace and how long and how often I want. And I can choose any market I want.

Caring about my initial payroll has no meaning to me. It's out of focus from the beginning of this thread.

1) The initial payroll can't be killed (as complete the accrued account) using the Kelly formular (having an edge).
2) Initial money has decreasing share on the growing account.

The money I earned is of all importance. It's the outcome of rewarding work. And it's the growth of 2% and my learning goals where I have the focus on.

My money management is a little bit sloppy. I am going to improve it by making myself aware that I have to reach my target without heavy DD as you have seen in my posts.

Have a good trading!
 
03/05/07 +5.7%

Max accepted risk assigned to the account by opening positions yesterday has been 35.7% of the account. 'Realized' risk has been ca. 80% of that.

Planned Gain/Risk ratio 15.88% (5.7%/35.7%).

To achieve 5.7% I was prepared to loose 35.7% of the account.
Since my target is 2% per day I took too much risk for that goal. (2.0% results in taking risk of 12.5% in above case).
 
Quote from gg12:

03/05/07 +5.7%

Max accepted risk assigned to the account by opening positions yesterday has been 35.7% of the account. 'Realized' risk has been ca. 80% of that.

Planned Gain/Risk ratio 15.88% (5.7%/35.7%).

To achieve 5.7% I was prepared to loose 35.7% of the account.
Since my target is 2% per day I took too much risk for that goal. (2.0% results in taking risk of 12.5% in above case).
More...

You must have a really high winning ratio. Reward to Risk is 1:6.2?

Seems you have struck a really nice balance of things, huh?

Good trading.
 
DayTrader07

I am using a variable stop rule.

It all depends on the chances I see in a specific trade.
If I am 60% sure that a trade will work out I will invest 20% of my account value. And that's independent from how much money I have in my account. I don't care about money in this thread.

I have no strict rules how big my stop will be each and every day! But, I have rules how to handle the account generally and that's hard enough, because it needs a focus on long term growth. Single trades are pure tactics, hundreds of them will be needed to make the strategy work.

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I am very confident that I can't wipe out this account because of all reasons I have posted in this thread i.e. the Kelly criterion and having agressive learning targets to continue developing a daily edge.

Time and effort -> growth, success
 
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