The Recipe to Reduce the Risk.
- Thread starter Jamie J.
- Start date
When you find out, you don't tell. Since few spend 99% of their time studying risk management, some ideas or stats you dig up, could work against revealing them.
I'd suggest you to read Taleb's books.
As well as Flaw of Averages & Flexibility in Engineering Design.
Our goal is to leverage Upside Opportunities and to limit Downside Risk.
You say it's not always clear to define the price move.
What if you pulled the trigger only when it's clear ?
Risk Management is of greatest importance.
Because even if you had a 99% win rate system,
The little 1% that remains is still your greatest enemy.
Our Goal is not to make predictions.
It's to make money. Know your business,
Then try and fail but look for buildin' an advantage.
Do you know how small is a casino's advantage ?
They can't tell when neither how much ...
But in the long run they're confident.
And skilled players till' rob Em' !
You really got to know your business.
Cause what's build on sand ain't robust.
Plus in order to win then one has to lose ..
Easier to be the sucker when we're unaware.
There are plenty of literature about hacking.
I believe a trader is a kind of a hacker.
Oh .. Not everyone becomes one ...
An advantage is a combination of :
- Know What & Know How.
I know that Abstract BS,
But as Handle said ...
Those who know do.
And learn more by doing.
Whereas those who don't teach ...
The best investments stay self-investments.
As well as Flaw of Averages & Flexibility in Engineering Design.
Our goal is to leverage Upside Opportunities and to limit Downside Risk.
You say it's not always clear to define the price move.
What if you pulled the trigger only when it's clear ?
Risk Management is of greatest importance.
Because even if you had a 99% win rate system,
The little 1% that remains is still your greatest enemy.
Our Goal is not to make predictions.
It's to make money. Know your business,
Then try and fail but look for buildin' an advantage.
Do you know how small is a casino's advantage ?
They can't tell when neither how much ...
But in the long run they're confident.
And skilled players till' rob Em' !
You really got to know your business.
Cause what's build on sand ain't robust.
Plus in order to win then one has to lose ..
Easier to be the sucker when we're unaware.
There are plenty of literature about hacking.
I believe a trader is a kind of a hacker.
Oh .. Not everyone becomes one ...
An advantage is a combination of :
- Know What & Know How.
I know that Abstract BS,
But as Handle said ...
Those who know do.
And learn more by doing.
Whereas those who don't teach ...
The best investments stay self-investments.
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Arithmetic can do wonders.
I don't know about others, but I personally use good old maths...
For example, if you find a logic
"Out of 100 trial, win 80 times and lose 20 times/ with equal amount"
Then probably you will be a long-time (consistent) winner, even after expense(comm+tax).
On the other hand, if win 60 times and lose 40 times, then you will be a loser, after long period.
You might be a winner before expense, but most likely loser after expense.
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Furthermore, if one can spend 50 years(from 30 to 80), then
1)With annual compounded return of 20%, your initial seed shall be 1.2^50 = 9100.438, like the case of Buffet.
2) With milder condition of annual 15%, your wealth will grow 1.15^50 = 1083.657 times, no matter seed is 10K or 100K.
For simplicity, we can remember "9000 times with 20%" and "1000 times with 15%".
Also, calculate total estimated expense(comm+tax), under your personal trading logic FOR THE 50 YEARS.
1)With annual compounded return of 20%, your initial seed shall be 1.2^50 = 9100.438, like the case of Buffet.
2) With milder condition of annual 15%, your wealth will grow 1.15^50 = 1083.657 times, no matter seed is 10K or 100K.
For simplicity, we can remember "9000 times with 20%" and "1000 times with 15%".
Also, calculate total estimated expense(comm+tax), under your personal trading logic FOR THE 50 YEARS.
Risk vs Reward is still the number one law in trading. Some things just don't change. 
However, it doesn't have to be a complete linear relationship; traders who are skilled can more or less bend that skew curve--or it may atleast appear that way.
However, it doesn't have to be a complete linear relationship; traders who are skilled can more or less bend that skew curve--or it may atleast appear that way.
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In that case, would it be fair to say that most of what you write should be skimmed through since you would not possibly reveal a game changer?
Those who can trade and can teach are uncommon.In that case, would it be fair to say that most of what you write should be skimmed through since you would not possibly reveal a game changer?
So it's up to you to make the uncommon, non-existent.
Haha. Actually I think it fosters people to read & re-read him.
To mine his posts, to dig & dig them till they find some gold nuggets.
My 0 cents.