Taking 410K to 4million by Year End 2010

[Trader666]

First of all, if you really do "have 100's of positions" they can instantly become WAY more correlated than you can imagine given the wrong circumstances.

Second, by BUYING options, neke couldn't lose more than he paid for them. So whatever percent of his total account he put at risk would not necessarily have been reckless under different circumstances (without calculating it I'm thinking roughly about a third of his account). Because, as I said, the rationale behind the trade and what's being traded are also critical factors.

Finally, here's a real life, real trade example. On the morning of Sep 8 2008, the google web crawler dredged up an old article on United Airlines filing for bankruptsy and the stock tanked. I was almost certain it was an old article and jumped into the STOCK with both feet. Notice the difference here -- near certainty it was a mistake (as opposed to a feeling the selloff was "overdone") AND buying stock, as opposed to expiring options. Trading was halted a few minutes later and UAUA reopened significantly higher early that afternoon.

Quote from Mike805:

Well, in my book it is that simple. 30-1 leverage on one position is definetly reckless, no matter the trade. That's just begging for pain or a blow-up.

FYI, I trade intraday only and my position size is never more than 3-5% of my account. Granted I'll have 100's of positions on occasion, some correlated and some not, but, my combined exposure to anyone instrument/market move is minimal (I also don't shoot for triple digit returns either). At 30-1, for one instrument, you're roadkill waiting to happen. Its insane no matter how you look at it...

 

[Mike805]

Quote from Trader666:

First of all, if you really do "have 100's of positions" they can instantly become WAY more correlated than you can imagine given the wrong circumstances.

Second, by BUYING options, neke couldn't lose more than he paid for them. So whatever percent of his total account he put at risk would not necessarily have been reckless under different circumstances (without calculating it I'm thinking roughly about a third of his account). Because, as I said, the rationale behind the trade and what's being traded are also critical factors.

Finally, here's a real life, real trade example. On the morning of Sep 8 2008, the google web crawler dredged up an old article on United Airlines filing for bankruptsy and the stock tanked. I was almost certain it was an old article and jumped into the STOCK with both feet. Notice the difference here -- near certainty it was a mistake (as opposed to a feeling the selloff was "overdone") AND buying stock, as opposed to expiring options. Trading was halted a few minutes later and UAUA reopened significantly higher early that afternoon.

To your first point; yes, I know that and my allocations are wieghted so I don't get too hurt when everything goes to shit. I have bad days just like everyone else.

To your second point, risking 1/3 of one's account on one position is poor risk management. You will not find a single professional in this business that does such things - at least not one that's been around a while.

To your third point; your idea of "near certainty" is as discretionary as neke's version of "overdone".

Like I said; this isn't about one's discretionary strategy. Who cares about what you think you're certain about. If you're going to risk 30% of your account or more on one position on a regular basis, you risk of ruin is huge.

 

[zdreg]

Quote from Pension_Admin:

Hindsight or no hindsight. What matter is, who actually capitalized by going long on BIDU on Thursday given the "obvious" situation.

how do u figure that the BIDU situation was obvious?

 

[Pension_Admin]

Quote from zdreg:

how do u figure that the BIDU situation was obvious?

It was not obvious. That's why I put the word obvious in quote.

" "

 

[kinggyppo]

Quote from konviction:

Trading is gambling, doesn't matter how much risk you throw in the equation. If chris ferguson, Johnny Chan, or any other pro gambler only risk 3% of their chips, or 50%, it's still gambling on an uncertain outcome.

DOH!! have to agree, that's why so many blow out on futures, trading too hot casino style.

 

[Trader666]

So you claim you sometimes "have 100's of positions" yet your "allocations are weighted" so you "don't get too hurt"? OK LOL.

Second, you have NO IDEA what my idea of near certainty was on that trade. You're just grasping at straws -- again.

Third, I never said anything about risking 30% on one position "on a regular basis" -- you did. I said that one can't say it's ALWAYS reckless. Because it's not.

Finally, you wrote "the flaw in neke's process has nothing to do with trade selection" and that's just flat out wrong. If you can't see the distinction between between differing reasons for putting on trades and trading stocks versus options that expire in one day, I can't help you.

Quote from Mike805:

To your first point; yes, I know that and my allocations are wieghted so I don't get too hurt when everything goes to shit. I have bad days just like everyone else.

your idea of "near certainty" is as discretionary as neke's version of "overdone".

Who cares about what you think you're certain about. If you're going to risk 30% of your account or more on one position on a regular basis, you risk of ruin is huge.

 

[Sean McLaughlin]

Can't we all just get along?

Let's call it a truce, shall we?

Let's let the PM resume updating us with his latest endeavors to recover from a rough start to the new year.

 

[trading_time]

When one achieves consistency through years of practice/money management/discipline it is no longer gambling because the outcome is not uncertain anymore.

TT

Quote from konviction:

Trading is gambling, doesn't matter how much risk you throw in the equation. If chris ferguson, Johnny Chan, or any other pro gambler only risk 3% of their chips, or 50%, it's still gambling on an uncertain outcome.

 

[Mike805]

Quote from Trader666:

So you claim you sometimes "have 100's of positions" yet your "allocations are weighted" so you "don't get too hurt"? OK LOL.

Second, you have NO IDEA what my idea of near certainty was on that trade. You're just grasping at straws -- again.

Third, I never said anything about risking 30% on one position "on a regular basis" -- you did. I said that one can't say it's ALWAYS reckless. Because it's not.

Finally, you wrote "the flaw in neke's process has nothing to do with trade selection" and that's just flat out wrong. If you can't see the distinction between between differing reasons for putting on trades and trading stocks versus options that expire in one day, I can't help you.

Aren't you the same guy who polluted the "How to Research and Verify Trading Ideas" thread? Weren't you constantly harassing people in that thread all the while contributing absolutely nothing? Frankly, you sound like a troll.

Based on your last statement; you obviously don't trade a portfolio of intraday systems, nor do you do anything remotely quantitative... So, you have no experience in allocating capital to various systems as proven by your last statement. But you do have a "real life" example of trading a news event with "certainty". LOL... It kinda sounds to me like you're full of shit.

Please don't try to help me. You really have no idea who you're talking to, LOL

Mike

P.S. To neke: Sorry to take this thread off topic, it won't happen again.

 

[Trader666]

This from the one who stubbornly maintains that neke's loss had nothing to do with trading options expiring in one day (along with several other naive misconceptions).

I know who I'm talking to alright... yet another ET "expert."

Quote from Mike805:

It kinda sounds to me like you're full of shit.

Please don't try to help me. You really have no idea who you're talking to, LOL