We need big losses from time to time, to rethink the strategy and improve it?

[lawrence-lugar]

last friday I had a big loss equivalent to 5% of my capital in a single day

I'm still green

Everything in trading is all relative to the overall, greater picture. Of your specific situation.

Losses will happen. I'm sure we can atleast all agree on that much.

5% is nothing to fret about, just so long as your average gain or wins are much greater than that.
Trading is more or less a basic average numbers game. -- Kind of like a fight or sports...if you have more men, you're more likely, generally, to win.

I don't mind losing 20% or 30% or even 40% in a day. -- If my gain capabilities are 70, 80, 90, 110% plus.
But more importantly, it's 2018...Make Trading Great Again...High-Five` ,

 

[SunTrader]

Question the value of all of these posts saying no big deal - without knowing "the whole story".

Unless the purpose of this topic was to receive a lot of attaboys only.

 

[neke]

Question the value of all of these posts saying no big deal - without knowing "the whole story".

Same goes for those saying BIG DEAL without knowing the whole story.

But seriously it is no big deal if he is making 50% or more per year. You would think he was saying 50% loss a day here. I make 5% loss a day more than 4 times a year. No, my account hasn't blown up in more than 10 years

 

[ironchef]

Wow thanks for yours comments:

Xela: yes position sizing is part of the problem

I am very aggressive I use 10% of my trading capital in each trade, I don't use margin.
Day trade only.

Neke: yes I am up huge last 12 months, I'm not so worried but I always try to make adjustments to the strategy.

wrbtrader: 6 big days with more than 5% profit of my capital.

When I see my total performance I relax and I think it could be normal, but it always hurts to see these big red days.

You have very very impressive returns and I congratulate your achievements. I do have one suggestion:

Calculate your Kelly and use that as a guide for finding your trade size. For example, if your Kelly is 20%, using 10% is aggressive but if it is 50% then it is not. I reduced my size to < 1/4 Kelly in 2017 after coachings from some folks here.

Best wishes.

 

[Evermore2017]

You have very very impressive returns and I congratulate your achievements. I do have one suggestion:

Calculate your Kelly and use that as a guide for finding your trade size. For example, if your Kelly is 20%, using 10% is aggressive but if it is 50% then it is not. I reduced my size to < 1/4 Kelly in 2017 after coachings from some folks here.

Best wishes.

Thank you,

My Kelly(last 12 months) is: 41.79% , so

Is it correct to use between 1/4 and 1/2 Kelly depending on the strength of the signal or pattern?

 

[ironchef]

Thank you,

My Kelly(last 12 months) is: 41.79% , so

Is it correct to use between 1/4 and 1/2 Kelly depending on the strength of the signal or pattern?

Very impressive! Very good question too.

I don't really know if this is like betting in poker or blackjack where you change your bet size depending on the cards on hand.

From what I read and from all the coaching I received here, it seems one should use a constant size because you really don't know if a strong signal will give you high wining. Trades are not deterministic and are governed by probability, affected by noise. I was told to adjust my size only when my Kelly, which I constantly update, changes significantly.

I hope others can chime in and help us on this one.

 

[aldrums]

I am very aggressive I use 10% of my trading capital in each trade, I don't use margin.
Day trade only.

You haven’t actually explained how much you are risking per trade. What percent of your account is your stop loss? How many day trades do you put on at a time?

 

[Evermore2017]

Very impressive! Very good question too.

I don't really know if this is like betting in poker or blackjack where you change your bet size depending on the cards on hand.

From what I read and from all the coaching I received here, it seems one should use a constant size because you really don't know if a strong signal will give you high wining. Trades are not deterministic and are governed by probability, affected by noise. I was told to adjust my size only when my Kelly, which I constantly update, changes significantly.

I hope others can chime in and help us on this one.

I did not know about Kelly until you mentioned it. I was online poker player, so betting sizes are in my mind in trading. Sometimes I tend to raise my bet size and that is possibly a mistake here.

 

[Evermore2017]

You haven’t actually explained how much you are risking per trade. What percent of your account is your stop loss? How many day trades do you put on at a time?

Most of the time two trades at a time, three maximum. 2% of the total capital is the stop loss per trade. 6% max drawdown to stop trading and review my strategy, like last Friday.

 

[wrbtrader]

Most of the time two trades at a time, three maximum. 2% of the total capital is the stop loss per trade. 6% max drawdown to stop trading and review my strategy, like last Friday.

What do you mean "review your strategy" (exactly) ?

You doing new backtesting, you reviewing each trade to see if you've been following the rules of your trade signal strategy, you reviewing the price action you're trading, you reviewing your trade management rules, you're updating your statistical analysis via recent metrics...what ???

wrbtrader