Kelly Criterion & Risk Of Ruin As Risk Management Tool

rvince99 said:
...I have a pretty big position in GE and getting indigestion from it. I have positions in all Dow stocks and GE is my biggest at the moment. I hate it. If it goes down further, Ill add more. If I get a pop up to where I'm profitable on the aggregate position, out I'll go. Rinse & repeat.
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Sorry, don't wish to appear trolling, but this is opposite to common sense, letting losses run while cutting profits short.
It is what scared money does, scared to sell in order to wear the loss, and scared to run with it once it recoups.
Never fall in love with any position or any sector, traders are mercenaries (should be).
 
themickey said:
Sorry, don't wish to appear trolling, but this is opposite to common sense, letting losses run while cutting profits short.
It is what scared money does, scared to sell in order to wear the loss, and scared to run with it once it recoups.
Never fall in love with any position or any sector, traders are mercenaries (should be).
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Exactly, it is the opposite of common sense, the opposite of what most do and suggest others do, the opposite of what most computer-generated trading systems executed hypothetically at data that was, suggest you do.

"Letting profits run" is the ambit of the compulsive gambler. As for (the appearance of) not cutting my losses short, I have my risk proscribed as well as anyone in the markets.

Most lose in the markets, and do so acting what, to the outsiders, appears as "rationally."

Why do what most do?
 
rvince99 said:
Hey FWIW, I dont advocate anyone trade at "full Kelly," as you may call it, etc., UNLESS their criterion is maximize expected growth without concern for any sort of drawdown.
Rather, the whole study of it unfolds in a manner that gives me a "framework" which all money management strategies fall into and can be logically assessed and implemented. This interests me because it is the only thing in trading I have control over. Ultimately, everything else depends on luck to some degree or another.

I have a pretty big position in GE and getting indigestion from it. I have positions in all Dow stocks and GE is my biggest at the moment. I hate it. If it goes down further, Ill add more. If I get a pop up to where I'm profitable on the aggregate position, out I'll go. Rinse & repeat.
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Thank you for your comments. I totally agree with you on your Kelly comments. On another thread, I ran a Monte Carlo on outcome vs various fractions, from full to Kelly to fractional Kelly and the outcome was obvious. When I used 1/10 Kelly, risk of ruin was zero within my Monte Carlo runs.

A side note on GE, so you are averaging down? There is a thread on averaging down in which most folks said averaging down were for losers?

But I do average down.:(:D

Regards,
 
rvince99 said:
Most lose in the markets, and do so acting what, to the outsiders, appears as "rationally."

Why do what most do?
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But in another post, you said trading option is not a zero sum game so why do most lose in the market if the outcome always (or mostly) has positive expectancy (not zero or negative sum)?
 
rvince99 said:
Exactly, it is the opposite of common sense, the opposite of what most do and suggest others do, the opposite of what most computer-generated trading systems executed hypothetically at data that was, suggest you do.

"Letting profits run" is the ambit of the compulsive gambler. As for (the appearance of) not cutting my losses short, I have my risk proscribed as well as anyone in the markets.

Most lose in the markets, and do so acting what, to the outsiders, appears as "rationally."

Why do what most do?
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Well I must say I'm gobsmacked but hey this is trading and I'm all for listening to another point of view.
Re GE, being long on this current down trend and adding would not be my method.
$15 level I would expect a strong bounce or just prior to, if not.......??? :(:thumbsdown::fistbump::wtf: (Punched on the nose, trading account bleeding) :)
 
themickey said:
Well I must say I'm gobsmacked but hey this is trading and I'm all for listening to another point of view.
Re GE, being long on this current down trend and adding would not be my method.
$15 level I would expect a strong bounce or just prior to, if not.......??? :(:thumbsdown::fistbump::wtf: (Punched on the nose, trading account bleeding) :)
More...
 
I'm ready to buy more under 13. Now, if DJ delists it from the thirty Industrials, I have to substitute out whatever they replace it with.
 
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