Prudent Risk Management Is The Only True Edge In TRADING
- Thread starter Buy1Sell2
- Start date
No dog in this hunt (and I apologize if this has been covered) but,
Casino games (besides poker) have no memory: IID probabilities/Central Tendency constructs can be applied. The market violates IID conditions for each and every split of time you might wish to contemplate. That "we all" seem to do it does not lend any validity to the violations. Hell, just the fact that we all telescope back and forth between shorter and longer and back to shorter time frames, demonstrates our own individual willingness to declare "Memory!" in market functions that casino games lack. And, "To our hazard."
Market events at time "t" are not independent of time "t-1", nor is their variance distributed even close to "identically." (The fact that you can quote today's volatility belies the fact that you *must* keep track of its changes.)
Okay. Carry on.
Casino games (besides poker) have no memory: IID probabilities/Central Tendency constructs can be applied. The market violates IID conditions for each and every split of time you might wish to contemplate. That "we all" seem to do it does not lend any validity to the violations. Hell, just the fact that we all telescope back and forth between shorter and longer and back to shorter time frames, demonstrates our own individual willingness to declare "Memory!" in market functions that casino games lack. And, "To our hazard."
Market events at time "t" are not independent of time "t-1", nor is their variance distributed even close to "identically." (The fact that you can quote today's volatility belies the fact that you *must* keep track of its changes.)
Okay. Carry on.
I know I heard it 200 times. You pulled that number out of your shiny hairy ass.
What if I say prudent is 1%? Are you going to pull out The Trader's Encyclopedia and prove me wrong?
Also, another thought came to my mind. So let's say I start out with 100K risking 2K. I lose it. Now I have 98K and I am going to risk only 1960 dollars. I lose it. With 96K I am risking only 1915 or so. etc.etc.
What happens is that my risk amount keeps shrinking so after a certain amount of time and loses, the risk % of my capital will be too tight for the market and I will keep losing faster and faster. With this current volatility, I might not even be able to enter a trade because it hits my 2% stop in no time. No refills, remember?
So the problem of this PRM shit, that with constantly shrinking capital you have to shrink your stop loss and that can be very detrimantal to your trading strategy.
In short, your slogan is full of holes. Shitholes...
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I'd fire whoever is getting you into those horrible trades long before I blamed prudent risk management.
That is not the point. I just proved that PRM itself will not prevent the meltdown of your capital if your strategy/psychology isn't sound.
Nope. 1 percent is a great number. Just don't lose more than 2 percent of TLNW.
Correct. PRM will prevent you from blowing out your account totally because you will have to stop trading before the blowout----But detractors always mention an absurd example of somebody losing on every single trade.--In reality, what happens is everyone has a positive winning percentage but most traders take profits early and take losses late. So, they are unable to overcome their inevitable losses.
EVERYONE has a positive winning percentage???? That sounds absurd.
Everyone has winners.
Everyone has losers too. Do you think one profitable trade out of five or ten trades is considered a positive winning percentage because they had one winning trade? I don't like your choice of words for your explanation, but I know what you mean... I think.
You must really believe that every profitable trader out there in trader universe made their profits only doing the B1S2 way...that is absurd for sure. How can you believe such a thing? You can't be that ignorant.
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