What do you think matters most in trading?

[fullautotrading]

Point well taken Ironchef --- We all know it is just the opposite. The more Capital you are trading the more difficult it is to maintain your percentage gain.

It is just what I observe, in real trading, with my approach and strategy.

Of course, if you think it "should" not be so you are free to continue having your opinion. I am just reporting what for me is a fact (I repeat, for the specific approach I use, which relies on portfolio margin).

It really does not change anything for me if anyone has a different "opinion" of what, according to his abstract view, should happen.

 

[fullautotrading]

What is a relatively small account?
Sounds like you are managing or want to manage relatively large accounts, how do your clients react to the relatively large account balance swings?
Most money managers I have dealt with (minimum account size 500k) try and keep swings to a minimum.

"Small", and "large" are adjectives that are obviously meaningless out of context. What might be a large amount for me might be considered negligible by Jeff Bezos.

Now, we must deal with facts and reality. A fact, for me, is that I would not be able to trade, with my approach, accounts that are "too small". Here, too small is relative to the instruments used and the approach used to trade them.

Clearly, the instruments matter. If you are trading e-minis or e-mini micros (which I would not trade), you have different requirements.

For me and what I specifically do, with less than 500K one should forget about automated algorithmic trading. 1MM is still pretty scarce and risky. From 2MM it starts to make some sense. And so on...

I also need portfolio margin accounts, for what I do. Again, it all depends on what one has in mind.

Yes, DD must be kept to the minimum possible in each given situation. You can't go 10% underwater and expect the investor not to leave
[Unless he has a clear vision and understanding of the DD reasons and why it may be wise to endure it.]

If you just want to chase moving averages or (equivalently) put gambles out there, one after another, waiting to become rich, you can probably start even with a few bucks and play with that until last.

Does that mean that those who have a small account cannot trade? No. It just means that you can trade manually and enjoy the entertainment while you get a better understanding of the market.

When I talk about "trading", I always refer to systematic wealth management. There is no "gambling" in what I do.

 

[themickey]

There is no "gambling" in what I do.

What you are saying, you have certain profitable outcomes without question?

 

[fullautotrading]

What you are saying, you have certain profitable outcomes without question?

Certainty, in human activities, does not exist in an "absolute" sense. It's just one of the many abstract concepts the human mind is capable of

When you wake up and go to work every morning, are you certain you will be back ?
Probably you are not "certain", but normally you come back.

Every morning the sun rises, and we are confident that perhaps it will rise tomorrow, and that we are not eaten by a black hole or wiped out by the blast of a supernova that exploded millions of light years away.

Are we certain?

For all practical intents and purposes, given suitable capital, I do have profitable outcomes (meaning a decent profit in a sufficiently large timespan, with acceptable DD) without exceptions

This is due to the fact that I seek to exploit structural objective features of the instruments and the market, particular arrangements (long/short positions), stop recovery mechanisms, and price fluctuations, and not try to gamble after guesses or dream after (inexistent) "signals".

[ I can also readily tell you if something else is going to work, even though normally in normal conversations I won't and I will just shut up as I believe anyone must do his own neverending journey...]

 

[themickey]

Certainty, in human activities, does not exist in an "absolute" sense. It's just one of the many abstract concepts the human mind is capable of

When you wake up and go to work every morning, are you certain you will be back ?
Probably you are not "certain", but normally you come back.

Every morning the sun rises, and we are confident that perhaps it will rise tomorrow, and that we are not eaten by a black hole or wiped out by the blast of a supernova that exploded millions of light years away.

Are we certain?

For all practical intents and purposes, given suitable capital, I do have profitable outcomes (meaning a decent profit in a sufficiently large timespan, with acceptable DD) without exceptions

This is due to the fact that I seek to exploit structural objective features of the instruments and the market, particular arrangements (long/short positions), stop recovery mechanisms, and price fluctuations, and not try to gamble after guesses or dream after (inexistent) "signals".

[ I can also readily tell you if something else is going to work, even though normally in normal conversations I won't and I will just shut up as I believe anyone must do his own neverending journey...]

Well the sun does come up every day and go down with certainty, it has for the last x million years.
Does your system pull a profit every day, whether realized or unrealized?

 

[fullautotrading]

Well the sun does come up every day and go down with certainty, it has for the last x million years.
Does your system pull a profit every day, whether realized or unrealized?

I am afraid to inform the readers, that there is no legit system generating "a profit every day". Apart from those backtested by clueless cranks (or created by money launderers)

["Realized" or "unrealized" are merely accounting terms (with quite arbitrary definitions, as they depend on the lot-matching method). What matters is the current PNL.]

Every day on average, over a sufficiently long timespan, and with bearable DD, yes.
That is the normal definition of consistent "profitability".

 

[themickey]

Every day on average, over a sufficiently long timespan, and with bearable DD, yes.
That is the normal definition of consistent "profitability".

Well I consider trading is gambling, its professional calculated gambling.
It pays off in the long run, but inbetween we strike black swans, system errors, degrees of unpredictable outcomes.

 

[fullautotrading]

Well I consider trading is gambling, its professional calculated gambling.
It pays off in the long run, but inbetween we strike black swans, system errors, degrees of unpredictable outcomes.

The fact that the sun has been there for four and a half billion years, will not give you any "certainty" about tomorrow
(After all, it must die sooner or later anyway, like each one of us.)

I am not against gambling. (It's just not what I do with investors' $$$, unless I am told to.)

But if one likes to take gambles I do not see anything really bad in it, as long as he can easily go along with the possible consequences.

One could even mix the approaches. Trading systematically most of the time and when an extreme event happens, place a substantial bet

(In my approach actually, the most unfavorable scenario will coincide exactly with an extreme situation very favorable to place a large bet which could be very profitable, with very high probability . Clearly, if one has the right capital to commit.)

 

[themickey]

The fact that the sun has been there for four and a half billion years, will not give you any "certainty" about tomorrow

It's certain enough in my calculations, it doesn't cross my mind tonight when I go to bed that maybe in the morning there will not be a morning.

I am not against gambling. (It's just not what I do with investors' $$$, unless I am told to.)

Ahhhh, now we see 1+1=2, it wouldn't be wise to acknowledge trading is gambling in public when you run a business trading private money.

 

[fullautotrading]

It's certain enough in my calculations, it doesn't cross my mind tonight when I go to bed that maybe in the morning there will not be a morning.

Ahhhh, now we see 1+1=2, it wouldn't be wise to acknowledge trading is gambling in public when you run a business trading private money.

As I told you, there is no gambling in what I do. But of course, if you like to see it as a "gamble", you are welcome to see it that way It will not change anything for me

To me, "gambling" is when for instance one uses some TA signal to trade. Or when one uses just his own sentiment to place an order. I am aware that someone will consider the first not "gambling" (because they are deluded that the market is "signaling" something to help them make $$$), but, as you can see, many things depend a lot on the attitude and experience of the observer

The difference that I probably would draw between "gambling" and "systematic consistent trading", is that the gambler is not really consistent, does not need to necessarily understand what he is doing, and may have very large swings (sure, occasionally he can get very lucky, of course).

A systematic algorithmic approach will produce a steady flow of profit over the long term (not huge as the idiotic claims you hear around from crooks or deluded people, but relatively "sure" and with bearable, adjustable DD ).