what the hell happened!?!?

Quote from kut2k2:

Edited for accuracy.

MM won't turn a negative into a positive. You still have to figure out when to enter and when to exit your trades so that you win more than you lose. Then you can apply MM to maximize that gain.
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FALSE
 
Quote from Buy1Sell2:

FALSE
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oh, here we go, please just give me a hint, what kind of MM can save you from bad calls. Please, I'm dying to hear. I make a lot of bad calls and on a bad night I try to think of some kind of MM that could save me from it all.

Please, you seem so wise, share just a bit of your vast knowledge with us.

otherwise, I will just have to take your poiwerful reply of "false" and maybe that will give me hope.

May I just ask you one humble questiion? If it is so, how the hell can I make money with mm if I keep guessing wrong?
 
Quote from Buy1Sell2:
Quote from kut2k2:

Money management (MM) won't turn a negative into a positive. You still have to figure out when to enter and when to exit your trades so that you win more than you lose. Then you can apply MM to maximize that gain.
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FALSE
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If MM could turn a negative into a positive, then there'd be career profitable craps and roulette players. The casinos can count on gamblers (people who take zero- and negative-expectation bets) to make the houses rich in the long run, regardless of what manner of MM is employed.

Dude, this is basic probability math.

Regarding MM in trading, that's just one leg of a three-legged stool. The other two legs are entry strategy and exit strategy. To say that only one leg counts or that it counts the most is to simply not understand the physics of a three-legged stool.
 
Entering randomly and exiting randomly employing proper money management will yield a positive result. --It will not be superior, but will yield a positive. --Basic math.

Thank you for your time.:)
 
Quote from Buy1Sell2:

Entering randomly and exiting randomly employing proper money management
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That is a fucking big oxymoron. If you employ money management, then you are not exiting randomly, period...

So stop the bullshit and start to make sense. Otherwise happy new year!
 
It probably would be money management, but his point is still a true and valid! :)
Quote from kut2k2:

FALSE
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If MM could turn a negative into a positive, then there'd be career profitable craps and roulette players. The casinos can count on gamblers (people who take zero- and negative-expectation bets) to make the houses rich in the long run, regardless of what manner of MM is employed.

Dude, this is basic probability math.

Regarding MM in trading, that's just one leg of a three-legged stool. The other two legs are entry strategy and exit strategy. To say that only one leg counts or that it counts the most is to simply not understand the physics of a three-legged stool.
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Both correct points you are making... no need to fight about it...
 
Quote from kut2k2:

If MM could turn a negative into a positive, then there'd be career profitable craps and roulette players. The casinos can count on gamblers (people who take zero- and negative-expectation bets) to make the houses rich in the long run, regardless of what manner of MM is employed.

Dude, this is basic probability math.

Regarding MM in trading, that's just one leg of a three-legged stool. The other two legs are entry strategy and exit strategy. To say that only one leg counts or that it counts the most is to simply not understand the physics of a three-legged stool.
More...

Generally I agree with this. Money management is important but it is inferior to having an edge. If you do not have an edge and participate in a real market you will most likely lose money. IF you have an edge money management will help you exploiting your edge in an optimal way (given the risk you are willing to take).

That said there exist some toy/academic problems that actually contradict this. The practical application of these examples are definitely questionable but it illustrates some of the illogical aspects of money management math. The one below is from Maslov/Zhang:

“Let us illustrate these results using an example of a risky asset, the price of which with equal probability p = 1/2 goes up by 30% or down by -24.4%. The stock itself is doomed: its price is going down by roughly 1% every time step (typically at each time step the price is multiplied by sqrt(1.30 • 0.756) ≈ 0.99). On the other hand, since average return of 2.8% of this stock is positive, following the Kelly optimal fixed investment fraction strategy with f∗ ≃ 0.3825 results in a positive growth rate of investor’s capital of some 0.53%.”
 
Quote from Hugin:

Generally I agree with this. Money management is important but it is inferior to having an edge. If you do not have an edge and participate in a real market you will most likely lose money. IF you have an edge money management will help you exploiting your edge in an optimal way (given the risk you are willing to take).

That said there exist some toy/academic problems that actually contradict this. The practical application of these examples are definitely questionable but it illustrates some of the illogical aspects of money management math. The one below is from Maslov/Zhang:

“Let us illustrate these results using an example of a risky asset, the price of which with equal probability p = 1/2 goes up by 30% or down by -24.4%. The stock itself is doomed: its price is going down by roughly 1% every time step (typically at each time step the price is multiplied by sqrt(1.30 • 0.756) ≈ 0.99). On the other hand, since average return of 2.8% of this stock is positive, following the Kelly optimal fixed investment fraction strategy with f∗ ≃ 0.3825 results in a positive growth rate of investor’s capital of some 0.53%.”
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edge schmedge, edge is just a gamblers fallacy, but if you think you have an edge and it makes you feel less like a gambler, at least you are providing liquidity to the market

when I was a kid, buying at support and selling at resistence was an edge (until 1990 when any buy and hold idiot could outperform any trader with an edge.)
 
Money management can be a great edge which is why there are some professional Craps players. And Craps as we all know comes with no edge.....
 
Quote from AK100:

Money management can be a great edge which is why there are some professional Craps players. And Craps as we all know comes with no edge.....
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when you're hot you're hot, when your're not you're not. Studies have shown that even novice dice rollers can make incredible money when they are hot simply by letting it ride.

Professional craps players know to use money management when the dice go cold.

One of the best money management techniques I know is to find a girlfriend you can move in with who will pay the bills until you get hot again.
 
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