Oh No, NOT Another S&P EMini journal...

Quote from KRSNA:

Based on figures posted here, you have a profit factor roughly of 4.18 on gross profits. However if you are paying $2 a side this drops to maybe 1.9 and $1 a side is 2.38. To stay above 2.0 I consider essential for a pro. Get above 3.0 and you definitely are the edge. The Lower your comms, better the PF.

Next you need to know your compound ratio. In my experience over some 20 years, if you have a good PF and CR you have arrived. Om Tat Sat. [/B]
More...

Hello KRSNA,
Thank you for the note.
How interesting....
On the issue of commissions, I am currently paying 3.50 round turn (all expenses included). So my net return on a single tick of profit is $9. So my PF, as you put it, is above 2.0. I am looking at leasing a seat at CME (rather than go through a broker, which I currently do) given my volume and thereby reducing my costs and increase my PF to above 2.38.
But to get to above 3.0 PF, I need to trade better, improve my system (however intuitive it is) more, and be disciplined about my entry and exit points. I have a long way to go on all these counts. Shaving commissions alone is not going to do it.
You said: if you have a good PF and CR you have arrived. I have a different take on having "arrived". I don't know that I will ever arrive.... because the verb "arrive" assumes the existence of a destination point set in concrete. To me, learning to trade is a never ending process, without any specific destination. I am sure we have all heard of stories where traders have accumulated millions in their accounts only to find them selves completely wiped out on a fine morning (or evening). I am very aware that I could be some one's lunch at any given moment.
By the way what does this mean? "Om Tat Sat"
 
KRSNA: You said: Based on figures posted here, you have a profit factor roughly of 4.18 on gross profits.
Could you please let me know how you computed this? I am curious, and, am definitely "math challenged".

Also, you said: Next you need to know your compound ratio. what is a compound ratio and how will it help me? And, How do I compute this?

Sorry about my ignorance. And, thanks for your help.
 
Quote from goodday:


You said: if you have a good PF and CR you have arrived. I have a different take on having "arrived". I don't know that I will ever arrive.... because the verb "arrive" assumes the existence of a destination point set in concrete. To me, learning to trade is a never ending process, without any specific destination. I am sure we have all heard of stories where traders have accumulated millions in their accounts only to find them selves completely wiped out on a fine morning (or evening). I am very aware that I could be some one's lunch at any given moment.
By the way what does this mean? "Om Tat Sat" [/B]
More...

Goodday,
By arrived I mean a place where you will not be someone's lunch because your money management is so controlled it is impossible to happen. I met an old trader who told me using his money management rules it was impossible for him to ever get wiped out.

The key he said was in controlling his largest losing trade. He set a rule for the largest loser and he never broke that rule. He was never wiped out. I did not really believe him and harboured a fear that this game was a knife's edge where a wipe out could easily happen.

Not any more. I too know it is impossible to be wiped out as I follow his rule as well. am now only playing with a small percentage of my capital and I ALWAYS reduce size after a loss and INCREASE size after a win. NEVER EVER the other way around. My biggest loss never gets bigger. In 2000 trades it never got bigger.

Increase size after a loss or average a loss or add to a loss and wipe out is an absolute definite mathematical certainty. No matter how many times you get away with it. A total wipe out is one day coming once you add to losers.
 
You must log in or register to reply here.
Back
Top