Quote from chipmunk:
in over 18 years i have never had 10 successive maximum losses.....
Might it happen one day? Sure. Might a sunami wipe out N.Y one day...maybe.
Bully for you. The fact that you take a literalist interpretation of what I said, instead of understanding the practical interpretation of it, makes me highly suspicious of everything you say in regards to your own trading, because you do not display the intuitive common sense a seasoned trader would pick up from experience.
I am further skeptical of your trading methodology if you say you have never had ten positions go bad in two decades of trading.
I have no idea what your actual methodology is, but there plenty of ways for this to happen: A portfolio positioned all long or all short for a temporary period is hit by risk on / risk off catalyst that swamps everything. A methodology with a 45 - 55% hit rate experiences a left tail outlier of poor result. A methodology that puts on trades in batches, three or four or half a dozen at a time, sees multiple batches go bad in an outlier occurrence that happens 0.5% of the time.
If you were really a seasoned and thoughtful trader with two decades' experience, you would get what I am saying. Every true battle scarred veteran of markets has some feel for tail risk in their bones because they have lived through enough shitstorms to earn it. Your responses come across as someone who pretends to a be a seasoned veteran but is actually an armchair quarterback.
Quote from chipmunk:
Sure OP...what about 40 successive losses it's all gone!
I wonder what the odds are of flipping a coin and it landing on heads ten successive times? I've never managed it..you? Never mind one where the odds are slighly in your favour.
With all due respect I am beginning to think you are not very bright. If you flip a coin long enough, not only will ten successive heads eventually happen, it is GUARANTEED to happen by the law of large numbers.
Estimating the odds of a fair coin flipping heads ten times in a row is a matter of high school math. Ten heads is a stretch, at less than one one-hundredth of one percent. But that is still within the realm of "will happen if you flip long enough."
And 20 years is a long time. A trader who makes, say, 20 trades a month for 20 years is going to have 4,800 trades - let alone the trader who trades much more than that, or who will routinely have ten+ long or short positions on at one time.
Then, too, the fixation on "10 in a row" is a red herring. You fixated on an arbitrary number because your actual depth of understanding in respect to probability and tail risk is weak. Let's take another number, the number five. What are the odds of getting five heads in a row with the flip of a fair coin? Just over three percent.
What are the odds, then, of a trader losing five times in a row, having a string of mixed wins and losses that amount to break even, and then losing five times in a row again, giving him an effective result equivalent to ten losses for the period? If his average win rate is 50%, not that bloody low. It will happen.
This is the kind of shit that real and seasoned traders understand... and the math is beyond basic... the fact that you take a mocking attitude towards risk control is a huge red flag.
Quote from chipmunk:
What other way is there to outperform the market than two ways?
1) Bet bigger
2) Trade more often
That's it! Everything else is a smoke screen. Sure betting 5% per trade is too much. But betting 0.5% per trade means you cannot do anything but line up with the averages. So where's the "middle ground?"
Amazing. You have no idea what you are talking about, and so you make glaring statements of ignorance that only serve to reveal how little you actually know.
See, this is why I occasionally get a rep for being mean or not playing nice on ET. I try to hold back and not use my rhetorical skills to pound people into the ground, but then shit like this comes out.
You haven't even been following along in this very thread that closely if you are really so blind as to how the pros achieve excellent returns while tightly managing risk. The best traders in the world use dynamic position sizing. The size difference between their smallest trades and largest trades can be a factor of 20 to 1, 40 to 1, or even more.
The fact that a Paul Tudor Jones might start the year taking positions with 0.5% or even 0.25% risk in no way precludes him from slowly building on his cushion of profits until he eventually has the ideal combination of tactical positioning and feel for the market, thus betting an amount ten times or even fifty times bigger in exactly the right spot.
This is really basic stuff that you have apparently never been introduced to. I would not fault you for your lack of understanding if not for your incredibly arrogant habit of assuming that what you don't understand does not exist.
Quote from chipmunk:
"any drawdown >6% and we will not invest..but we expect you to make us 20% p.a" LOL you must be kidding me! Stick a broom up my ass and I'll sweep your floor as well.
So as long as you keep the risk reasonable and tade a little more frequent that's the way to beat the 7% p.a. Mutual Fund game.
Or must it be from a superior system? (LOL)
You really don't understand what you're talking about here, which is why you are embarrassing yourself. It's an interesting area of discussion that a lot of traders would benefit from getting a better grasp on, so I'll queue up the next TW installment just for you.
And again, it's not your lack of understanding that brings out the harshness of my replies here... it's the fucking arrogant ignorance. You obviously don't have working knowledge on this subject, because you are speaking on matters that aren't even up for debate because practitioner track records and real world methodologies achieving just what you say is impossible have already been established ten times over.
You might as well be a physiologist who has never heard of Usain Bolt claiming it is physically impossible for a human to run the 100M in less than ten seconds. It's already been done, and the trading equivalent is continually being done by those who know how (without requiring freakish genetic gifts either).
