Kelly Criterion & Risk Of Ruin As Risk Management Tool

In relation to daytrading..if you think about what you are doing..as in trading for the "day"..or part of the day..then..does in not make perfect sense to be aware of the average moves that are made for a "day"!

The more you get into financial trading..the more you will see that "averages" are widely used in all areas of pricing and decision making..but..as always..make sure you fully understand what it is you are trying to achieve..as..it might just not be possible to do so..so..why even bother trying!!
 
MrScalper said:
To be honest..no way to tell without seeing your entries and exits..but as I know how you operate :)..I would say you are enjoying the bull run that seems to never be ending right now!!

Unless you are prepared for the worst case scenarios..and know exactly what not and what you must do.. then.. you really are just pissing about..same as most do.
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In the current bubbly market, a monkey can make money throwing darts at the charts, so, my better outcome with "patterns" could just be an artifact of the bull market! There are still lots to learn.:(

Like to ask you two more questions:

1. How do I prepare for the worst case scenarios?

2. Can one make money combining random trades (entry) and trade management? There was a discussion on this in another thread.

It may not be obvious but I did learn a lot from you.:thumbsup:

Best regards,
 
MrScalper said:
In relation to daytrading..if you think about what you are doing..as in trading for the "day"..or part of the day..then..does in not make perfect sense to be aware of the average moves that are made for a "day"!

The more you get into financial trading..the more you will see that "averages" are widely used in all areas of pricing and decision making..but..as always..make sure you fully understand what it is you are trying to achieve..as..it might just not be possible to do so..so..why even bother trying!!
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Thank you. I think I understand what you and MACD are trying to tell me.
 
MACD said:
Sometimes I wonder if it is worth the effort to be of any help? Maybe first, we need to really determine the motives and effort that wannabes will put forth. Needed: Willingness to listen, Respect for the effort, and acceptance that it takes some work to learn enough to be successful.o_O
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We come here for different reasons. Only one thing is certain: Participation is optional. I for one appreciate your wisdom and counsel and I am committed to pay forward so the cycle closes.

Best wishes.
 
ironchef said:
In the current bubbly market, a monkey can make money throwing darts at the charts, so, my better outcome with "patterns" could just be an artifact of the bull market! There are still lots to learn.:(

Like to ask you two more questions:

1. How do I prepare for the worst case scenarios?

2. Can one make money combining random trades (entry) and trade management? There was a discussion on this in another thread.

It may not be obvious but I did learn a lot from you.:thumbsup:

Best regards,
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1. Do not get greedy and take your profits regularly..after all..it just takes a click of the mouse to re-open a position..if you stay holding then you must accept the risk involved.. plain and simple..right now it seems a waste of time taking profits..but rest assured..it will not always be like this :)

2. Random trades..or trading just for the sake of trading..is never a good plan..every trade should have 3 things set before you pull the trigger..entry price..exit price with loss..exit price with profit..your trade size will be determined by your risk level.. those who say timing is not important..well.. really show what they know..and that is very little..timing is everything when it comes to making money trading or investing..and.. the best way to get timing right is using bar charts with simple math equations that can all be done automatically with MS Excel..other than that..the rest is really "academic" :)
 
MrScalper said:
1. Do not get greedy and take your profits regularly..after all..it just takes a click of the mouse to re-open a position..if you stay holding then you must accept the risk involved.. plain and simple..right now it seems a waste of time taking profits..but rest assured..it will not always be like this :)

2. Random trades..or trading just for the sake of trading..is never a good plan..every trade should have 3 things set before you pull the trigger..entry price..exit price with loss..exit price with profit..your trade size will be determined by your risk level.. those who say timing is not important..well.. really show what they know..and that is very little..timing is everything when it comes to making money trading or investing..and.. the best way to get timing right is using bar charts with simple math equations that can all be done automatically with MS Excel..other than that..the rest is really "academic" :)
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1. Yes, I will. Thank you for reminding me. 2000 and 2008 were very painful years.

2. I just finished a back test of 1 year's worth of SPY, doing "random" entry, set a tight stop loss and "let profit ran". It was not rigorous nor definitive by any means but the result was not encouraging. So, random entries and then expect to be profitable with "risk management" is no easy feat.

I will study your suggestion on bar charts and simple math equations. I used to base my trades using fundamental analysis and probabilistic computations. Thanks to your prior comments of using charts of the underlying, I now add chart patterns of the underlying to time my entry. I have done a dozen trades so far and the results are encouraging.

Best regards,
 
ironchef said:
1. Yes, I will. Thank you for reminding me. 2000 and 2008 were very painful years.

2. I just finished a back test of 1 year's worth of SPY, doing "random" entry, set a tight stop loss and "let profit ran". It was not rigorous nor definitive by any means but the result was not encouraging. So, random entries and then expect to be profitable with "risk management" is no easy feat.

I will study your suggestion on bar charts and simple math equations. I used to base my trades using fundamental analysis and probabilistic computations. Thanks to your prior comments of using charts of the underlying, I now add chart patterns of the underlying to time my entry. I have done a dozen trades so far and the results are encouraging.

Best regards,
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If you are still thanking me in 1 years time.. you will have learned something of real value!

I like to think of it as one big game..with the losers playing against the winners..the losers have a lot in common..the winners know that what is put forward by most is pure and utter rubbish..and has absolutely nothing to do with making money!

The losers are everywhere..just go to the home page of this site and look at all the rubbish posts about nothing..and they then wonder why they lose :)

There is no substitute for experience..no matter what any idiot tries to tell you otherwise..be he selling something or just having a day dreaming session!

The world is full of idiots who like to hear themselves speak..just make sure you understand that they are nearly all on the losers side..so be very careful to whom you listen to!

"There is more value in the blink of an eye..than in months or rational analysis"

I just wish I was 30 years younger..as you only really start to understand and learn as you get older.. unfortunately there is no easy way..just the way the silly mind works :)
 
MrScalper said:
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I just wish I was 30 years younger..as you only really start to understand and learn as you get older...
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On this I call bollocks. I think EVERYONE wished they were 30 years younger to repair the damage or accommodate the mistakes they made...But you are assuming that 30 years ago you'd have the knowledge you have now, as a 30-year younger kid. This is the "coulda' woulda' shoulda'" problem. 30 years ago, I'd make the same mistakes and would probably be in the same state of affairs.

I say, forget focusing on the 30 years ago. Let's focus on the 30 years into the future, and not make the same mistakes we made over the past 30 years.
 
Overnight said:
On this I call bollocks. I think EVERYONE wished they were 30 years younger to repair the damage or accommodate the mistakes they made...But you are assuming that 30 years ago you'd have the knowledge you have now, as a 30-year younger kid. This is the "coulda' woulda' shoulda'" problem. 30 years ago, I'd make the same mistakes and would probably be in the same state of affairs.

I say, forget focusing on the 30 years ago. Let's focus on the 30 years into the future, and not make the same mistakes we made over the past 30 years.
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Why are you still making the same old mistakes over and over :)
 
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