The Perfect Edge

Playing the devils advocate for a minute.

Is it possible trading full time forces a trader into a psychological corner; dictating miniscule risk is taken to preserve emotional 'continuity', at the cost of forfeiting significant profits earned?

I say this because the Wizards and others have noted some of the most profitable strategies are those generating 25-40% winners.

My conclusion: most traders, understandably, cannot tolerate low win rate systems (implying high dd) when their sole income source is trading.

Does this equate to missed opportunity?
 
Yeah babbyy...

Thanks for asking. You know I just love to talk about my systems...

I manually trade a Grid version of it.

Here are some stats:
  • # of Days: 93
  • Bal : $110,162.43
  • NAV: $107,925.22
  • Current DD: -2.03%
  • Max Intraday DD -8.00%
  • Current UPL: -$2,237.21
  • Current Leverage: 3.39:1

Michael B.
Quote from Runningbear:

Electric,

How's your Cash & Carry system going? it is still in line with your projections?

Runningbear
More...
 
The discretionary componet of my Retail Spot Forex Trading is in the selection and the bias of the direction and pairs to scalp or to transfer into the long term holding pattern...

Discretion is a special word. It implies the trader has a choice and is not bound by a hard wired system.

It's funny, true discretion would be hard without any rules though...maybe I got this part wrong.

Michael B.

P.S. I gotta go to bed, but one of my pairs is near a target...
 
I am discovering that the challenge becomes to find the set ups in the discretionary portion of my trading. There are many choices. The more different set-up methodologies you have, the more choices.

Also I limit myself to a universe of "positive interest carry pairs". Pulling out the trades, while collecting interest proves to be challenging. Also, in the event that they turn into long term trades causes a correlation problem in the system basket. I now am holding 8 pairs long term and chasing around the current price with the TP (averaging in, helps keep the TP reasonably close while increasing the exposure and interest earned).

I currently am at 4.44:1 leverage and sporting a -3.28% DD (after 95 days, the max DD I have seen is 8% and I have stayed under 5:1 leverage).


Michael B.

P.S. I would love to reduce my exposure in EUR/AUD and get out of the AUD/USD position completely. Here are my holdings:

Long USD/JPY 37,694 units (avg price 118.89)
Short EUR/AUD 174,148 units (avg price 1.5979)
Short EUR/GBP 31,610 units (avg price 0.6828)
Short EUR/HUF 33,299 units (avg price 252.18)
Short EUR/USD 31,658 units (avg price 1.1884)
Long EUR/CHF 63,180 units (avg price 1.5625)
Long AUD/USD 51,000 units (avg price 0.7388)
Long USD/CAD 17,576 units (avg price 1.1574)
 
achilles28,

I PM'd you a ranked interest spreadsheet.

Michael B.


Quote from achilles28:

Hey Michael.

Where does a person find info on currency interest differentials?

I've got a few ideas i'd like to explore. Thanks.
More...
 
Took out 0.08% in trades and 0.04% in interest totaling 0.12% (30%/yr. ROI).

I widened the targets on the scalps and am trading less.

I got out of the AUD/USD... I also switched from the short EUR/GBP to a long GBP/CHF to net more interest on the carry.

Michael B.

P.S. I still want to get flat that EUR/AUD and re-enter with less exposure.

P.P.S. The JPY interest rate announcement really banged the long down on the USD/JPY that I have....

http://www.bloomberg.com/news/markets/currencies.html

This will be a long ride with a lot of carry interest earned, during the wait. But no worries, as I am never exposed enough for damage. Leverage = 4.44:1 and DD= -3.24%

P.P.P.S. I got to watch my leverage as I anticipate some average downs in the USD/JPY. I hope I can take a few pair off tomorrow AM. I really do not like to be light over the weekend, but that JPY has placed me in a pickle!
 
Yes I believe this to be. I myself have a system with only38% winners and 20% drawdowns and weeks of churning or drawdown. It is nicely profitable but the psychological distress is difficult to take sometimes(like this last month). This has got me feverishly trying out new permutations of my system that has a steadier equity curve. Otherwise they may carry me away away away....where life is beautiful all the time

I'd hate to reduce my overall returns for mere sanity however!
Quote from achilles28:

Playing the devils advocate for a minute.

Is it possible trading full time forces a trader into a psychological corner; dictating miniscule risk is taken to preserve emotional 'continuity', at the cost of forfeiting significant profits earned?

I say this because the Wizards and others have noted some of the most profitable strategies are those generating 25-40% winners.

My conclusion: most traders, understandably, cannot tolerate low win rate systems (implying high dd) when their sole income source is trading.

Does this equate to missed opportunity?
More...
 
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