Increasing risk after a loss

[ParisJOM]

"Increasing risk after a loss" !

.. a statement that makes many shitintheirpants and definitely a statement that will encourage some controversy (however the hell you spell that) and some public stoning.

If this thread starts to atract some interest and comments I will endevour to explain how increasing risk after a loss has paid off well for me over the years, but lets start with some ground work & definitions.

What is "risk"?

Risk is NOT the size of the trade you have open on the market but rather the capital that a given trade is suscepticible to losing.

... while waiting to see some ideas, thoughts, ..etc, I wish all of you an excellent week.

 

[ElectricSavant]

don't forget endurance and emotions and what you can sit through...pulling the trigger finalizes it

MAE and MFE studies can be the framework that characterizes your system...

Application of timestops can be the "thought outside of the box"...(best used in momentum trading)

Trade size based on trade probability can be thought about too and hopefully discussed...thanks for this thread

as a starter...do you folks look at strings of wins and losses in your bet sizing, martingaling....money management? (not trade management)

Michael B.

 

[ParisJOM]

Quote from ElectricSavant:

don't forget endurance and emotions and what you can sit through...pulling the trigger finalizes it

MAE and MFE studies can be the framework that characterizes your system...

Application of timestops can be the "thought outside of the box"...(best used in momentum trading)

Trade size based on trade probability can be thought about too and hopefully discussed...thanks for this thread

as a starter...do you folks look at strings of wins and losses in your bet sizing, martingaling....money management? (not trade management)

Michael B.

"Money management" .. you're definitely headed in the right direction here. ... risk management is key in trading.

 

[ElectricSavant]

ParisJOM,

Do you feel that the markets are random and that you can apply your money/risk managment and overcome them on that alone?

I am not expressing my personal preferences as this is your thread and I am interested in your conclusions. I always learn something from these sort of threads.

Thanks again...

Michael B.

 

[buzz]

If you got a sound trading method, I believe in adding to your position on the third trade, to reduce the loss on the last two trades.

 

[ElectricSavant]

Have you applied this to stop and reverse? ...just curious?

Quote from buzz:

If you got a sound trading method, I believe in adding to your position on the third trade, to reduce the loss on the last two trades.

 

[ParisJOM]

Quote from ElectricSavant:

ParisJOM,

Do you feel that the markets are random and that you can apply your money managment and overcome them on that alone?

I am not expressing my personal preferences as this is your thread and I am interested in your conclusions. i always learn something from these sort of threads.

Thanks again...

Michael B.

Definitely. This is one point I was thinking of discussing latter.

Without going into any great deal of detail right now (I'm still a bit "tired" after the sunday lunch with my wife's parents...80% wine), yes, you can definitely control probability, regardless of an assumed random market, via risk management & position sizing.

Please excuse my rather passive stance here for now, but my intention is to entice some others to start some ideas on the topic, and I'll throw in my 2 cents worth of critics, comments, ideas, and my own strategy latter in the thread (once I get a higher level of blood in my alcohol).

 

[ElectricSavant]

I am reading with interest and hope that you do decide to share your strategy..

electric..out

Michael B.

Quote from ParisJOM:

Definitely. This is one point I was thinking of discussing latter.

Without going into any great deal of detail right now (I'm still a bit "tired" after the sunday lunch with my wife's parents...80% wine), yes, you can definitely control probability, regardless of an assumed random market, via risk management & position sizing.

Please excuse my rather passive stance here for now, but my intention is to entice some others to start some ideas on the topic, and I'll throw in my 2 cents worth of critics, comments, ideas, and my own strategy latter in the thread (once I get a higher level of blood in my alcohol).

 

[malcolmkatalia]

just adding my opinion here.

increasing "risk" after a loss can be perfectly valid if the probability of long-term gain in doing so is relatively high and the chance of catastrophic loss is very low.

i don't think there's any "hard and fast" rule on this. lots of people have rules such as "you should only risk 2% of your account per trade" or whatever. but i feel that such statements, most of the time are totally worthless, because it needs to be in the context of the strategy in question. there are some strategies where that particular rule may apply, and give the highest probability of success. however, there may be other strategies, good strategies which work, where you double the trade size (or whatever) after a loss.

so it all depends on the big picture. the strategy as a whole.

Quote from ParisJOM:

"Increasing risk after a loss" !

.. a statement that makes many shitintheirpants and definitely a statement that will encourage some controversy (however the hell you spell that) and some public stoning.

If this thread starts to atract some interest and comments I will endevour to explain how increasing risk after a loss has paid off well for me over the years, but lets start with some ground work & definitions.

What is "risk"?

Risk is NOT the size of the trade you have open on the market but rather the capital that a given trade is suscepticible to losing.

... while waiting to see some ideas, thoughts, ..etc, I wish all of you an excellent week.

 

[TenTwenty]

Shouldn't your next trade have nothing to do with your previous trade, whether it was a gain or a loss?

Shouldn't you increase your risk only if the situation demands it rather than trying to compensate for previous losses which are independent of the future?