If trade management was the key to success everyone could be taught to become a trader billionaire. This is what some scam artists promise to naive retail traders. What you say is not true, it is far from reality. Probability and trade management are inextricably related. High probability means you can afford smaller wins. Low probability means you must get large wins. You can only achieve that via trend-following. Trend-following is not for everyone and not every market allows trend-following all the time.
Metrics to use for system selection
- Thread starter ronblack
- Start date
If trade management was the key to success everyone could be taught to become a trader billionaire. This is what some scam artists promise to naive retail traders. What you say is not true, it is far from reality. Probability and trade management are inextricably related. High probability means you can afford smaller wins. Low probability means you must get large wins. You can only achieve that via trend-following. Trend-following is not for everyone and not every market allows trend-following all the time.
That's where you and I differ....among other things....Everyone can NOT be taught proper trade management. 90% of traders can not trade in a fashion in which you lose more than you win. Is it a coincidence that 90% of traders are net losers. Is it a coincidence that 90% of traders are seeking "high-probability, high win rate" trading gimmicks. To the contrary the scam artists promise high win rate systems and not low win rate methods....like Michael Harris perhaps?
You have to be psychologically wired to be able to trade a low win rate method and most traders are not wired nor will ever be wired to trade in this manner successfully.
I want you to be honest....do you actually believe that you as a retail trader (Goldman Sachs, Renaissance Technologies, etc are excluded with their phd's, mathematicians and physicists and insider info ) will be able to maintain a high win rate throughout your ENTIRE trading career?
"I don't think you can consistently be a winning trader if you're banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time." ~Bill Lipschutz: The King of Currencies
A breakdown of your ramblings:
- Everyone can NOT be taught proper trade management
- 90% of traders cannot trade in a fashion in which you lose more than you win
-"high-probability, high win rate" trading gimmicks.
- To the contrary the scam artists promise high win rate systems and not low win rate methods....
If you do not know that a low win rate method requires catching extended trends you have no right to pretend you know anything. At a 20% win rate you need an avg. win to avg. loss ratio of 4 just to break even, commission and slippage excluded. Possibly need around 5 to break even with commission and slippage. If you have ever traded you should know that is something very hard if not impossible in short term and intraday trading.
According to your ramblings, in order to maintain a reasonable profit factor of 2 one must have an avg. win to avg. loss ratio of 8. If commissions, slippage, etc. is included it can go up to 10.
You are the scam artist. You are promising R = 10 to people just by teaching them money management. Nobody gets even R = 2 without an edge. They will never get R = 4 without a sophisticated edge. R = 6 is impossible without an edge to time trends and reduce losses due to whipsaws.
I think you are trying to fool people. You are the scam artist.
Dumbass did you even graduate from high school? On second thought I know you didn't since you grew up in the ghettos....
Where did I say I was teaching anyone anything. I'm here to trade against your sorry dumb ass and take your money because you are a perennial loser. You've been on these boards for years and you still can't trade worth shit.
Your pills are on the table but they have expired...you are a loser...this is the sound you like...plonk, plonk...
7. Plonk
An expression that connotes a deep sexual desire for the addressee. Mostly included in the vocabulary of crackwhores, camilles, and other strange women. A sign to avoid the speaker at all costs
~Urban Dictionary
http://www.urbandictionary.com/define.php?term=plonk
Dude, you've got some serious issues....stay away from me..you're now on ignore...
Retard you do not even know what you read. There are 6 definitions prior to the 7th one you chode you retard. You literally plonked yourself to the last definition:
"plonk 59 up, 10 down
The sound a user makes as it hits the bottom of another user's killfile bin"
http://www.urbandictionary.com/define.php?term=plonk
The topics discussed up to this point in the conversation have not really addressed the central concern: the max drawdown characteristics of the system, and if that performance is compatible with the trader's emotional tolerance.
It is a typical mistake for the fresh ( er ) trader to place too much emphasis on the other more "sexy" metrics that are headliners and eye candy. You can even bury the the drawdown within the Sharpe Ratio if you'd like to minimize the blemishes and pimples.
What are the top four daily and monthly max drawdowns the system has seen for the past XX years ? Can the trader live with that ?
From my experience, this becomes the primary driver for the trader in a live market. The 'sexiness' gets lost completely under the heat of financial stress. That is also the first thing the risk manager and firm principals at a HF or private futures prop group is going to look at.
Each trader has a unique pain tolerance threshold. Find yours.
It is a typical mistake for the fresh ( er ) trader to place too much emphasis on the other more "sexy" metrics that are headliners and eye candy. You can even bury the the drawdown within the Sharpe Ratio if you'd like to minimize the blemishes and pimples.
What are the top four daily and monthly max drawdowns the system has seen for the past XX years ? Can the trader live with that ?
From my experience, this becomes the primary driver for the trader in a live market. The 'sexiness' gets lost completely under the heat of financial stress. That is also the first thing the risk manager and firm principals at a HF or private futures prop group is going to look at.
Each trader has a unique pain tolerance threshold. Find yours.