What's wrong with compounding returns?

it seems that most of u r trading systems where u trades r automatically executed?

i might be in the minority here, but i trade chart patterns and volume in equities. i feel that no computer system can comete w/ a human's visual interpretation of a setup; therefore, i'm definitely in the let it all ride camp.
 
Saxman,

You're probably right about no machines 'mind' ever riveling that of a humans. But for some setups, it doesnt need too.

Some are quite simple, really. If they're defined correctly.
 
Quote from ElectricSavant:

This is brilliant :) (use correlation tables on the internet)


To be honest, pairing a range-type strategy with a trend following fits my psychology better. With four pairs
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I got it now. :) Trending in one usually equals non trending in the noncorrelated.

Thanks.
 
Quote from achilles28:
Several members here seem to favor the extraction of monthly profits as opposed to letting them ride (compounding returns).
..
Whats wrong with compounding returns?
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Compounding is absolutely key.
You will find that ET traders prefer to jack away all or some of their profits (if, when, or how much they do profit) for living expenses or whatever else.
It is actively choosing the treadmill as their personal continuum.
:)
 
Quote from achilles28:

Several members here seem to favor the extraction of monthly profits as opposed to letting them ride (compounding returns)...

Whats wrong with compounding returns?
More...

There's nothing wrong with compounding returns.

However, the reality is that most traders are not able to do such for personal reasons (pay the bills, family to support et cetera).

Also, don't forget about the IRS...they are dipping into your pockets so anybody that saids they take 100% of their profits and compounds it...

You need to take what they say with a grain of salt unless they meant that they take 100% of what's remaining of their profits and compounds it.

In fact, most of the guys I know that are profitable and are able to compound their returns (100%) are of the following:

* Single with no debts
* Single and still living at home with the parents
* Single with a girlfriend paying the bills
* Married with a spouse paying the bills
* Living off some sort'uv inheritance or windfall income

Everybody else (those that are profitable) are just slowly growing their accounts just like anybody else with a job.

Therefore, if you got bills to pay...

Your only choice is to extract some profits eventhough you obviously would love to compound 100% of it.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
 
There is a good psycological reason to take money out of your account.

I find that when I capure a big move and have a big increase in equity, removing some of it makes me feel poorer, so I will tend to trade more conseratively.

I have in the past been prone to being too agressive when I'm trading well, and have often given back too much to the market after a big rise in my equity. So taking out money helps to improve my performance.

I figure I can always transfer it back into the account if I need it.

Runningbear
 
Quote from achilles28:

Saxman,

You're probably right about no machines 'mind' ever riveling that of a humans. But for some setups, it doesnt need too.

Some are quite simple, really. If they're defined correctly.
More...

I couldn't agree more. I trade a very very simple strategy. Being a trend follower, I have no problem letting it ride until my strategy signals me to get out and reverse.

I'm in the markets ~98.6% of the time and I'm currently sim trading a trend following strategy on a currency pair using NinjaTrader...

Over the past two years, it's done very very well. I plan to sim it for another six months... then I'll open an account.
 
Your taking the numbers out of the illusion and making it real...:)

Good Trading to You

Michael B.


Quote from Runningbear:

There is a good psycological reason to take money out of your account.

I find that when I capure a big move and have a big increase in equity, removing some of it makes me feel poorer, so I will tend to trade more conseratively.

I have in the past been prone to being too agressive when I'm trading well, and have often given back too much to the market after a big rise in my equity. So taking out money helps to improve my performance.

I figure I can always transfer it back into the account if I need it.

Runningbear
More...
 
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