Overtrading and the other thing

[trader198]

the term OVERTRADING is those people who are losers.

if you are winning, why not trading?

people who donot like trading should not never trade. only those passionate people who will deliver great results.

I love trading, just wish market even opens at weekend. the most disppointed is the market closes at weekend.

trading is fun, whether lose or win. why? each trade is a challenge to you. if everything is static and predictable, then no one will be interested in it.

 

[TrendPlayer]

1) Have a system that specifies conditions where entry and exit signals occur (time and price)
2) Take only your system's entry and exit signals
3) Use small position size on each entry and pyramid into larger positions

You can only overtrade in frequency if you have no system (i.e. totally discretionary)
You can only overtrade in size if you're gambling (i.e. sizing on gut feelings)

You made it really clear on this post. I have actually put a lot of thought into this. Because my strategy is a profitable one. And when I am confident with my consistency, whos to say when to stop? Why should you stop if your strategy works. The most important thing is you stick to your signals that make you money. If they occur they take them. Then I realized that I needed a sort of safety net. So Once i make $500 in a day, I cut my shares in until I increase my profits to 250 more.
From there I will go back to my previous larger size and continue working my way up with the 250 I made. When I reach over $1000.00 I increase my shares again, increase my stop out with $750 profit.

Believe it or not, your system will always evolve and you will always learn to manage keeping your profits without stopping to trade on a certain prefixed amount.

 

[kut2k2]

A more important question is Kelly Fraction of WHAT? Net worth or account size? Too many people use a fraction of their accounts in their trading but I'm not sure that makes sense, when you consider position sizing you have to take into account your net worth. If Bill Gates opened an IB account with $1M, he shouldn't be betting using Kelly or half Kelly or anything like that, he should be way more aggressive because that amount is nothing for him. And vice-versa if you have a big account but you have debt to your name (like a big mortgage), you should bet less in that case

You can only trade (through your broker) what is in your trading account so that is where you apply your trading fraction. If you wish to put all or most of your net worth in your trading account, that is your choice. But if you apply your Kelly fraction directly to a net worth that largely exceeds your trading account, a loss could wipe out your trading account and leave you with additional and previously avoidable fees.