Position sizing

[Buy1Sell2]

Quote from LondonUSTrader:

I think it is rather silly to say you pay a heavy price for being too conservative. What price is that? If you are playing a net losers game how can being too conservative ever be a bad thing? If you are consistent over the long run that is really the only thing that matters. I would rather err on the side of being too conservative than aggressive in your money management.

Let's not overrate the importance of money management. It is important, but not the most important thing. Like psychology, money management is only important once you have a method that has a positive expectancy. With no positive expectancy and good money management you will simply die a slow death, rather than a quick one.

The bottom line with money management is do you have a money management method that will keep you alive as long as possible in this game? That's it. If you combine that with consistent trade results you will do very well.

For the most part, excellent points. Never put yourself in a position to knock yourself out of the game. Those that do are fueling my pool , hot tub and Captain Morgan habits.

 

[Bitstream]

Quote from ElectricSavant:

But you would need to understand the range of the progression ie volatility for scaling to be be evaluated.

and lets not even introduce time frame.

that's why i was referrin' exclusively to particular trends. u obviously wont be able to liquidate exactly at every single top but u'll be able to acccumulate more or less at the exact bottom if the shit bounces regularly at the trend line. these kinda setups appear often on stocks gappin' for whatever reason. recent examples would be xmsr and on friday fnl. it's a particular pattern that tells the tale... u have to see an unusually straight trend line the marks those higher lows.

 

[LondonUSTrader]

Quote from mschey:

What I find that's silly, is that you can't figure out the cost of being too conservative, you had better spend some more time studying money management and geometric growth functions.

The purpose of money management is not to keep you alive, it's to make you money. To maximize your growth in the account given the levels of risk you can tolerate.

With all due respect, and this may sound a bit harsh, but you have a losers mentality. The first paragraph, you say that trading is a net losers game. Then you speak of money management as a way to keep you alive as long as possible. In both cases, the presupposition is that you will eventually lose, and die. If that's what you believe about the markets, you will never be successful. I suggest you get on Ebay and pick up a copy of "Get the Edge" by Tony Robbins. It will help you address your issues about the market.

Scaling in and out is not problematic, but it does impact returns. I have found that Scaling out will reduce your returns in terms of dollars made, however, it also serves to reduce your risk. Adding to winners, increases the amount of money made, but it comes at a price, the price is increased drawdowns. Scaling out of winners, reduces the amount of money made, but also reduces the drawdown. In that sense, it comes down to a question of preference and utility. How much risk are you willing to accept? Once you know that you then choose the form of money management that will maximize your growth given your level of risk.

Thank you for your kind words.

I have spent plenty of time studying money management, thank you for your concern.

Actually, no assumption at all about eventually losing. I merely stated a statistical fact, that trading futures overall is a loser's game. Otherwise 90%+ wouldn't lose would they? I didn't say I expected to lose. It seems you're pretty quick to assume stuff.

It's interesting by stating a fact, that trading futures is a net losers game that you assume all sorts of things about my trading and "my issues".

Whatever my mentality, to me no method of money management can make you money unless your system first has a positive expectancy.

As for scaling, IMHO the advantages/disadvantages of it depends on the characteristics of any individual system.

Feel free to continue the personal attacks and erroneous assumptions if you so wish.

 

[JimmyJam]

Quote from Cheese:

Perhaps I should add that the above example is for e-minis (eg YM). So a maximum position of .02% for a trading capital of $2500 is a $5 bet or stake (ie $100,000 capital=max stake of $200). Also, obviously, your betting stake rises as you capital increases from net market gains. That is not a such a slow process if you have a very accurate trading methodology.

0.02%?

Nope, unnecesarily conversavtive.

A trader with a good system can intra-day trade with a stop loss representing 2% - 5% of total performance bond and still do very well.

My thoughts.

Best,

JJ

 

[JimmyJam]

Quote from mschey:

All of the big blow ups involve leverage and NOT MANAGING RISK AND TAKING LOSERS! Folks there's the key to successful trading....manage your risk. Leverage has nothing to do with it

Quote from mschey:

What I find that's silly, is that you can't figure out the cost of being too conservative, you had better spend some more time studying money management and geometric growth functions.

Somebody's been doing a helluva lot of work.

 

[mschey]

Quote from LondonUSTrader:

Thank you for your kind words.

I have spent plenty of time studying money management, thank you for your concern.

Actually, no assumption at all about eventually losing. I merely stated a statistical fact, that trading futures overall is a loser's game. Otherwise 90%+ wouldn't lose would they? I didn't say I expected to lose. It seems you're pretty quick to assume stuff.

It's interesting by stating a fact, that trading futures is a net losers game that you assume all sorts of things about my trading and "my issues".

Whatever my mentality, to me no method of money management can make you money unless your system first has a positive expectancy.

As for scaling, IMHO the advantages/disadvantages of it depends on the characteristics of any individual system.

Feel free to continue the personal attacks and erroneous assumptions if you so wish.

Just quoted your own words...take it FWIW. You are operating under some false assumptions, and they will not serve you well in becoming an Elite trader. (ok...that was a little condescending, but my experience with most on ET, is that most are hacks and wanna be's, so I operate from the presupposition)

If you can't take a little constructive criticism then don't open the door and refer to someone else's post as "silly!" I do, what others dream about, and that's trade for a living. I trade both discretionary and mechanical systems. I currently trade 5 different systems, so when it comes to trading, systems and money management, I am one of the few who do(and consider myself an expert), versus the many who dream.

 

[wwx]

Quote from mschey:

For trades you manage manually, I find that adding to losers and scaling out can work well.

mschey:

Can you possibly illustrate these approaches with an example or two?

Thanks.

 

[LondonUSTrader]

Quote from mschey:

Just quoted your own words...take it FWIW. You are operating under some false assumptions, and they will not serve you well in becoming an Elite trader. (ok...that was a little condescending, but my experience with most on ET, is that most are hacks and wanna be's, so I operate from the presupposition)

If you can't take a little constructive criticism then don't open the door and refer to someone else's post as "silly!" I do, what others dream about, and that's trade for a living. I trade both discretionary and mechanical systems. I currently trade 5 different systems, so when it comes to trading, systems and money management, I am one of the few who do(and consider myself an expert), versus the many who dream.

Quoting my words? I think not. Please read my last post careful and the one prior to that.

I said trading futures is a losing game overall. That means the majority of people lose. That is a fact.

You then made various assumptions based on what you interpreted me as saying, not what I actually said. Did I say I expected to lose? No. You assumed that.

So, do tell me what false assumptions I am operating under?

So, now more assumptions. You assume everyone on ET is a hack unless proven otherwise? How nice. Actually, there are many excellent traders here, although they may be in the minority.

Fortunately, I have no desire to become an "elite" trader, whatever that may be (it sounds rather egocentric to me). My only expectation is to try and trade as well as I can.

I also don't go around making assumptions about things I don't know about without any evidence. But, that is just me.

 

[JimmyJam]

Quote from mschey:

For trades you manage manually, I find that adding to losers and scaling out can work well. I am unable to do anything with it on a systemic basis.

Whoa whoa whoa whoa!

I must have missed that one in the first reading.

Never do that! :eek:

Take your losses, cut the trade, and come back to fight another day.

Yes, because the mini's tend to trade in a back-and-forth fashion 70% percent of the time, you can get your coin back up using this technique ...

But I saw a guy do that on one of these threads (after I told him it was good until it wasn't, a la Black Swan, so therefore it was being irresponsible to advise other people to do it). He got pissed and kept doing it, as it just so happens, the market closed on the lows that day, ... after a substantial down move.

Goodnight,

JJ

 

[ElectricSavant]

Does he buy the double double?

Quote from sosa1974:

You can meet him and In/Out burger and pay him a fee. He will give 6 months of entry points and trades. I think he said $200, if you got a few hundred bucks he'll help you out.