I started day trading stocks live a few months ago and my win rate is just above 50%. I start with pretty light positions until I have a few losses, 2-3 then I increase size and if I win I go scale back to trading light. Sometimes it does backfire but its very rare that I have a 4-6 losing trades in a row. Just wondering if others have a similar strategy and if it worked out in the long term or not.
Is increasing risk/size after successive trading losses good risk management or bad?
- Thread starter NinaB
- Start date
Streak calculator, need a higher win%.
https://www.sportsbookreview.com/picks/tools/streak-calculator/
https://www.sportsbookreview.com/picks/tools/streak-calculator/
%%
That could work well;
as long as your ''size'' is reasonable.
Just remember, ninab/ 88% hit rate can be wrong years in a row ;
JAN barometer /Stock Traders Almanac[That hi% forcaster is still helpful except 1987 &2009./LOL]
2020 looks like 2009, Nasdaq had 2 huge down months= janfeb/ then up 43% NOT a prediction; dow /IWM looks weak this summer,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Is increasing risk/size after successive trading losses good risk management or bad?
Professional traders & gamblers know that when they are losing they are playing at their worst & judgement gets impaired. Most trade smaller size aiming for base hits before slowly & carefully adding in more size.
When you pile on size to quickly come back from a loss it feels good, it's a recipe for disaster - eventually you end up taking a gigantic loss.
Try to avoid the temptation to come back up by taking large bets.
Professional traders & gamblers know that when they are losing they are playing at their worst & judgement gets impaired. Most trade smaller size aiming for base hits before slowly & carefully adding in more size.
When you pile on size to quickly come back from a loss it feels good, it's a recipe for disaster - eventually you end up taking a gigantic loss.
Try to avoid the temptation to come back up by taking large bets.
Last edited:
Works great if you have unlimited capital. As @danielc1 said, this is a Martingale strategy.
If you don't have unlimited capital, most people do the opposite.
If you know your Kelly (with true positive expectancy), you could trade a steady fractional Kelly to try minimize the risk of ruin and maximize gain. If you don't have true positive expectancy, trading fractional Kelly allows you to go out of business slowly.
Depending on your goals fractional Kelly w small martingale (negative progression) works very well. CC Sid Browne's Kelly strategy. The idea being, if targeting some level of return, to deleverage as you approach said goal to maximize probability of profit and minimize loss impact. Also has added benefit of reducing kelly induced vol drag.
More succinctly herein -
https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1424&context=gaming_institute
Last edited:
I'm not using martingale progression... I'm just increasing my size 25-100% and its not every time. Why would I search anti-martingale? This would only be good if my win rate was like 80-90%?
Yup I understand volatility will eventually go down but I don't think that will change my win rate, my returns will just be lower I think.
I understand this but it doesn't help my question. You don't mention if me waiting 2-3 losses is either good or bad and you don't clarify what piling too much risk means... Thanks anyways.
I'm not using martingale. That is crazy. I'll look into Kelly.
Thanks I'll take a look!
Two things:
Math is against you:
With a win rate just above 50%, you could have a losing stroke of more then 10 (even 20) in a row. If you risk more after a loss, you will just lose more on the losers...
There is no memory in the market. It is not because your former trade has been a loss, that a winner is coming up. It is not because you have 5 losers in a row, you will have more chance of
the next one being a winner. Expectancy is just that what it really means: Every trade has a (your winrate) chance of being a winner, regardless what the outcome has been before this trade.
Second:
You should exam where this solution of risking more after a loss, comes from.
Do you have the need to be 'right' in the market?
Math is against you:
With a win rate just above 50%, you could have a losing stroke of more then 10 (even 20) in a row. If you risk more after a loss, you will just lose more on the losers...
There is no memory in the market. It is not because your former trade has been a loss, that a winner is coming up. It is not because you have 5 losers in a row, you will have more chance of
the next one being a winner. Expectancy is just that what it really means: Every trade has a (your winrate) chance of being a winner, regardless what the outcome has been before this trade.
Second:
You should exam where this solution of risking more after a loss, comes from.
Do you have the need to be 'right' in the market?