Ryan Jones - the final frontier in snakeoil!!
- Thread starter 50 cent
- Start date
Quote from kiwi_trader:
The book isn't good either - its full of mistakes (if you check) and the basic premise is also a scam.
Hmm,... coming from you this remark certainly bears its weight.! what's wrong in the book? Its pure math and probablitities that seem logical to me. You refer to his fractional ratio theory maybe? Any hints?
Two issues:
the calculations have a number of errors (i think u can find details at trader2traders site).
the premise is bet big with a small account and wind back when the account is big.
Trouble is that this prescription =
"bet big when you are new and make lots of errors including, perhaps, not getting out"
"bet big when you are likely to do psych damage to yourself"
and then, if you should be amazingly lucky and survive overleveraging your early trading then
"wind back your risk levels to something sensible"
Instead of:
1) work out a reasonable fixed fraction risk level
2) wind it back when you are small, vulnerable and learning
3) wind it up when you have it together (according to your plan) to the precalculated sensible fixed fraction of equity.
the calculations have a number of errors (i think u can find details at trader2traders site).
the premise is bet big with a small account and wind back when the account is big.
Trouble is that this prescription =
"bet big when you are new and make lots of errors including, perhaps, not getting out"
"bet big when you are likely to do psych damage to yourself"
and then, if you should be amazingly lucky and survive overleveraging your early trading then
"wind back your risk levels to something sensible"
Instead of:
1) work out a reasonable fixed fraction risk level
2) wind it back when you are small, vulnerable and learning
3) wind it up when you have it together (according to your plan) to the precalculated sensible fixed fraction of equity.
just ordered the book and found the attached article in eSignal forum... Not related to Ryan Jones but on MM, what kind of MM method this is called?
send all retail stkbrokers to iraq.
maybe then they will be more productive.
maybe then they will be more productive.
Does anyone out there hv a spreadsheet showing fixed fraction, fixed ratio, percent risk, and percent volatility position sizing models (just as what suggested in below link)???
Is there a book explaining all these methods?
http://www.traders2traders.com/papers/Ryan.Jones.MM.htm
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I agree with most of what Gary Fritz says above. I have been experimenting with the fixed ratio position sizing strategy using ProSizer, the Monte Carlo simulation tool I developed just for this purpose (see http://unicorn.us.com/trading/prosizer.html if you're curious about it).
I compared fixed fraction, fixed ratio, percent risk, and percent volatility position sizing models. In all cases I adjusted the parameters so that the average of the Maximum Drawdown from all the trials came out to 25%. Then I looked at the return. I did this for trades generated by two different trading strategies. My assessments are as follows:
* Fixed ratio usually performs better than fixed fraction.
* One will likely find that the %risk or %volatility models described by Van K Tharp superior to fixed ratio, for the same drawdown.
* Fixed ratio is dangerous: higher standard deviation of draw-downs, higher probability of ruin. It fails to account for equity size or risk per trade.
* I think it's irresponsible for Ryan Jones to promote this method to beginning traders, who won't understand the risk involved. On the other hand, I have noticed that sometimes fixed ratio is the best-performing model for small accounts.
Is there a book explaining all these methods?
http://www.traders2traders.com/papers/Ryan.Jones.MM.htm
--------------------------
I agree with most of what Gary Fritz says above. I have been experimenting with the fixed ratio position sizing strategy using ProSizer, the Monte Carlo simulation tool I developed just for this purpose (see http://unicorn.us.com/trading/prosizer.html if you're curious about it).
I compared fixed fraction, fixed ratio, percent risk, and percent volatility position sizing models. In all cases I adjusted the parameters so that the average of the Maximum Drawdown from all the trials came out to 25%. Then I looked at the return. I did this for trades generated by two different trading strategies. My assessments are as follows:
* Fixed ratio usually performs better than fixed fraction.
* One will likely find that the %risk or %volatility models described by Van K Tharp superior to fixed ratio, for the same drawdown.
* Fixed ratio is dangerous: higher standard deviation of draw-downs, higher probability of ruin. It fails to account for equity size or risk per trade.
* I think it's irresponsible for Ryan Jones to promote this method to beginning traders, who won't understand the risk involved. On the other hand, I have noticed that sometimes fixed ratio is the best-performing model for small accounts.