You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Martingale betting system - Sic Bo
- Thread starter jonp
- Start date
As long as a black swan event doesn't wipe out 100% of your account, you can live to trade/play another day.
Say your a market maker and can average down on size in a market that is .50 cents deep (based on daily atr). Well you would ensure that you can go $1.00 deep to withstand any outlier events. When the outlier event occurs (black swan that pushes the market past $1.00) ensure that the losses result in a loss no greater then 10% of your bankroll.
Shut it down. For the day and try again the next day. Its all about risk management and money management. If 95% of all traders lose money and 95% of traders are not market makers, that should tell you something.
Say your a market maker and can average down on size in a market that is .50 cents deep (based on daily atr). Well you would ensure that you can go $1.00 deep to withstand any outlier events. When the outlier event occurs (black swan that pushes the market past $1.00) ensure that the losses result in a loss no greater then 10% of your bankroll.
Shut it down. For the day and try again the next day. Its all about risk management and money management. If 95% of all traders lose money and 95% of traders are not market makers, that should tell you something.
Quote from TokyoGhetto:
As long as a black swan event doesn't wipe out 100% of your account, you can live to trade/play another day.
Say your a market maker and can average down on size in a market that is .50 cents deep (based on daily atr). Well you would ensure that you can go $1.00 deep to withstand any outlier events. When the outlier event occurs (black swan that pushes the market past $1.00) ensure that the losses result in a loss no greater then 10% of your bankroll.
Shut it down. For the day and try again the next day. Its all about risk management and money management. If 95% of all traders lose money and 95% of traders are not market makers, that should tell you something.
This is a childish assessment of the reality. When you introduce MM, you change the results. And assuming a black swan will not wipe you out is a false assumption in the world of trading. You do not always get to risk manage it away, such as locked limit markets. After 9/11, they closed the markets for several days. You had no contrl over your trades while the markets had a few days to digest this reality. People get wiped out under your "assumption."
That is why MM goes beyond intra-day liquidity providing. Most MM are long the market 95% of the time and its because you can calculate your losses down to zero because a stock can go to either zero or infinite. Margin to equity is important because if you are MM on margin you can blowout past your capital reserves.
However if you trade strictly cash and are long only you can calculate your max loss if the stock goes to zero (black swan). If that stock does go to zero and that would equal to a loss of only 10% of capital reserve I think thats responsible risk and money management.
Now if 10% of capital is used on a stock that is 10 dollars and you can average down to zero, its obvious you have a huge bankroll to back you up *cough* GS *cough*. Chances are that 99% of days you will make money and a black swan results in a 10% draw down on equity reserves. Thats why HFT MM is big business its basically a race to suck the market dry 1/10th of a penny at a time before the MM model blows up. If your smart you make your money and walk away, no different then being in a casino except you become the casino.
lastly any trader who puts in a trade of 100 shares or 1 million puts themselves in a position to be stuck in a locked market. Its a reality of the business and everyone is at risk.
However if you trade strictly cash and are long only you can calculate your max loss if the stock goes to zero (black swan). If that stock does go to zero and that would equal to a loss of only 10% of capital reserve I think thats responsible risk and money management.
Now if 10% of capital is used on a stock that is 10 dollars and you can average down to zero, its obvious you have a huge bankroll to back you up *cough* GS *cough*. Chances are that 99% of days you will make money and a black swan results in a 10% draw down on equity reserves. Thats why HFT MM is big business its basically a race to suck the market dry 1/10th of a penny at a time before the MM model blows up. If your smart you make your money and walk away, no different then being in a casino except you become the casino.
lastly any trader who puts in a trade of 100 shares or 1 million puts themselves in a position to be stuck in a locked market. Its a reality of the business and everyone is at risk.