Kelly Criterion & Risk Of Ruin As Risk Management Tool

[MrScalper]

Bet 1/2, 1/4, 1/8, 1/16.. of the farm?

Being there done that too.
I actually understand this now.

It is amusing. Many commented that you hadn't said anything of substance but what you said helped me strung together all my thoughts to create my own trading method.
I disagree. I don't think Kelly is crap, it gives me an anchor to formulate my trading strategy and risk management plan.

Anyway, appreciate your reply and comments.

the best way is to only ever bet what you can afford to lose..and divide it into parts depending on chosen market and chosen strategy..for eg..daytrading limit set at max loss of $500 over 5 trades..which gives you a max loss of $100 per trade..which equates to 1000 @ 0.10..500 @ 0.20.. 200 @ 0.50..100 @ 1.00

of course..if you don't know how..and what..to daytrade..then..no matter what way you structure your risk..the chances of you losing are very very high..so.. controlling your risk is of no real use unless you know what to do..and more importantly..can actually do it when the opportunity arises

longer term trading is far easier..but again..unless you know how..and what..losing becomes far greater chance..even if you increase the account substantiality but fail to take the necessary steps to prevent giving it all back when the time comes

to sum up..talk is cheap.. theories are fine for academics..buzz words are great for salesmen..if anyone decides to start risking their hard earned money in the financial markets..without a clear understanding of what is really involved in order to gain the required experiences..then.. let's just say they will more than likely get the biggest shock of their life..and..this shock has driven a lot of people over the edge..some so far as to leave this mortal world !!!!!!!

 

[MrScalper]

%%
I started to say something about risk of ruin + not taking much money into a pool hall, when young+ daytrading, especially since i seldom use 10 minute barchart/candlecharts..........; but since that specialist seemed to need some seller$ not to long ago , i see your point .LOL-LOL. Not a prediction or a gamble.

i learned something of value tonight watching a tv programme about the brain..namely..an experiment with a group of people..they were all shown clips of animals in various stressful situations..some asked to just let their emotions run as normal..the rest were asked to suppress their emotions using willpower

afterwards..all were given a hand spring and asked to hold closed for as long as possible..result..all those who were asked to suppress their emotions using willpower..let go the spring before those who let their emotions run as normal

conclusion..exerting willpower uses up energy..or..it drains you..so..imagine what all those silly TA indicators and other ridiculous things do to your brain..and..we all know the end result for most

very interesting programme..must download the series to watch and make some good use of this stupid internet crap

 

[filthiestkiwi]

Ralph,

Don't you just love the way that the kelly criterion and your work makes people mad?

It is amazing to me that something that is as indisputable as gravity is denied by so many for such silly reasons.

Anyway, give me a call next time you are in chicago.

 

[ironchef]

Ralph,

Don't you just love the way that the kelly criterion and your work makes people mad?

Mad? No, we just don't understand Mr. Vince's work, some of us are just mom and pop retails, who the professionals referred to as plebs.

 

[MrScalper]

Mad? No, we just don't understand Mr. Vince's work, some of us are just mom and pop retails, who the professionals referred to as plebs.

you could always ask them to show you some charts..and how they go about making decisions on how..where..and when..to enter and exit the market

then.. you will more than likely have a real laugh

 

[ironchef]

you could always ask them to show you some charts..and how they go about making decisions on how..where..and when..to enter and exit the market

then.. you will more than likely have a real laugh

Don't give us a hard time. You don't need Kelly, Optimum Growth Fraction, risk of ruins... but those of us newbies find it useful to have something to lean on, i.e., a crutch.

Speaking of charts, how about the GE charts? It is looking interesting to me.

I have been watching it for months trying to decide if I can make a short term play:

Any comments appreciated.

 

[MrScalper]

Don't give us a hard time. You don't need Kelly, Optimum Growth Fraction, risk of ruins... but those of us newbies find it useful to have something to lean on, i.e., a crutch.

Speaking of charts, how about the GE charts? It is looking interesting to me.

I have been watching it for months trying to decide if I can make a short term play:

View attachment 181968

Any comments appreciated.

golden rule..never ever take advice from another person when it comes to your own money..make your own decisions..wisely..and accept the outcomes..good..or bad!

yes..GE..thx for reminding me..had completely forgotten about it..looks like it might be worth a bet here for a long term hold trade..with 3% dividend it is not a bad return compared to bank rates

not for me..but might be for someone related to me..will keep an eye on it from here on out with a view to buying..but would start with 200 shares and watch it closely once in

if the major market falls then GE might be bought up..but as of now the chances of that seem low unless we get a black swan event..or donald makes a big boo boo

put it this way..unlikely to go bust..3% dividend.. down around 50%..starting to save money instead of wasting it..you could definitely do a lot worse

 

[ironchef]

golden rule..never ever take advice from another person when it comes to your own money..make your own decisions..wisely..and accept the outcomes..good..or bad!

yes..GE..thx for reminding me..had completely forgotten about it..looks like it might be worth a bet here for a long term hold trade..with 3% dividend it is not a bad return compared to bank rates

not for me..but might be for someone related to me..will keep an eye on it from here on out with a view to buying..but would start with 200 shares and watch it closely once in

if the major market falls then GE might be bought up..but as of now the chances of that seem low unless we get a black swan event..or donald makes a big boo boo

put it this way..unlikely to go bust..3% dividend.. down around 50%..starting to save money instead of wasting it..you could definitely do a lot worse

Thanks.

 

[ironchef]

Thanks.

Reminded me of this (IBM):

last August when IBM was at $139.

 

[rvince99]

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.