Is it really possible to make money in this trading lark?

This is a discussion on Is it really possible to make money in this trading lark? within the First Steps forums, part of the Reception category; Originally Posted by juanbyte Roberto Hope the link works this time Simulator It does indeed. (I've increasingly been realising as ...

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Old Oct 22, 2004, 2:35pm   #141
Joined Aug 2004
Quote:
Originally Posted by juanbyte
Roberto

Hope the link works this time Simulator
It does indeed. (I've increasingly been realising as my strike-rate continues to get better that I ought really to be staking more.) Many thanks for your help, and continued good trading.
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Old Oct 22, 2004, 2:44pm   #142
Joined Oct 2004
Why would I only risk between £500-1,000 if my capital is £50,000? If I have a 100% return on the trade my funds have then increased by 1 - 2%, that is not good trading. Those that then have a 40% strike rate or less are doomed to failure before they even start. I have heard some call this good money management but that isa only for those that are in the markets to survive. They could achieve the same in fixed income with less stress and risk.

A man who risks between 5 -10% of his capital per trade can also easily manage risk. I would go as far as to say there is a high probability that he has to be better at managing risk because it does not take too many losers before he finds himself in serious trouble.

The beauty of the markets is the diversity of strategies, the best are the ones that produce returns year after year.
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Old Oct 22, 2004, 3:17pm   #143
Joined Dec 2003
Quote:
Originally Posted by juanbyte
Roberto


I do not see the logic in your money management suggestion, yes you can make a good living with no downside but why settle for 12% when you can make 60% trading ones own account.
Simple because good trading is always about managing risk and if you can risk zero while having unlimited upside reward then this is true nirvana.

It's subtle points like this that all you hotshots should start to understand

As for the 1% that I'm always going on well that's a pretty good industry standard, of course though nothing is written in stone.

Assume though you have 2 money managers trying to seek investors. One says in his memorandum that he's going to risk between 5-10% on every trade (but he'll likely make a fortune in profits). The other one says he's going to risk between 0.5% - 1% and profits are likely to be 'slightly' above the industry average.

Guess which one the smart money investors will back every day of the week, yep the lower risk guy. In fact it's unlikely that the high risk guy will even be let in the door of many establishments so he cries himself to sleep every night and cannot understand why everyone has turned down the potential to 'make a fortune'.

Reason, it's not about making money, it's about managing risk.
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Old Oct 22, 2004, 3:21pm   #144
Joined Dec 2003
Quote:
Originally Posted by LION63
Why would I only risk between £500-1,000 if my capital is £50,000? If I have a 100% return on the trade my funds have then increased by 1 - 2%, that is not good trading.
See what I mean about people having no idea that the game is about risk management. To them it's all about maximising profit and to hell with how much is risked to make it.

Well here's an idea to get the max profit from your next trade - put 100% of your available capital on it

I love the way he chucks out the phrase 'if I have a 100% return on a trade' as if they're so common you can pluck them from a tree like apples in season.
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Old Oct 22, 2004, 3:40pm   #145
Joined Aug 2004
In intraday trading, a 100% return on an individual trade is fortunately very common, otherwise intraday trading wouldn't produce reliable profits or (in my case anyway) a way to make a good living. To take a not necessarily exactly realistic example just to illustrate the point, if every trade you do has a 35-pip stoploss and a 35-pip "take profits", allowing for dealing costs, then every successful trade produces a return of 100% in that what's returned as profit is what was risked. But it's obviously and undeniably also true that, measured this way, a 100% loss is unfortunately very common too. But please don't deride people for referring casually to trades with 100% return. In practice, many intraday traders must manage more than that, and regularly, to be able to make a living at all!
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Old Oct 22, 2004, 3:50pm   #146
Joined Jan 2004
the ability to trade and derivatives leverage offers the opportunity for substantial returns
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Old Oct 22, 2004, 4:09pm   #147
Joined Oct 2004
If one is unable work out what a 100% return on a trade is, how can one claim to be trading? Anley, I must say that you are a very clever individual. Managing risk you say, some of us are here to make money, you on the other hand would be well at home in the City fleecing the widows and orphans with your sky high fees and mediocre returns.....Playing games with their money.
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Old Oct 22, 2004, 4:59pm   #148
 
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Joined Jul 2004
Red face Re: Is it really possible to make money in this trading lark?

AS PREDICTED, when it comes to put up or shut up time, they RUN RUN RUN

I hope this is all the proof anyone here needed that yet another newbie is blowing smoke.

Why wouldnt mr 91% just take the tiny effort required to shut us all up and post some realtime trades? Hmmmmmmm???

I should be on that show "Myth Busters", because I just busted yet another one
As I predicted, all talk and no action



Quote:
Originally Posted by juanbyte
Roberto

Longshot
Prove 9/10, been there done better than that, I have already published my account summery elsewhere on this site that shows 17 winning trades in a row with dates and times.
Still wasn't good enough for some people and probably won't be good enough for you, so I do not see the point in doing it again..
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Old Oct 22, 2004, 5:05pm   #149
 
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100% correct anley. Painfully obvious they havent a clue what risk management is about. You might as well get a stamp on your forehead that says "future blowout".

Look everyone!, I cant bet HUGE per position according to this formula. Neeto! Notice they never talk about the drawdowns they will get by doing this. How many do you think can handle a 50% drawdown, 70% 90%???

If you use the maximum value in the Kelly formula, you will have extremely painful drawdowns that the vast majority of people could not psychologically handle.

The fact is, the Kelly formula is only a starting place. That is what makes it so painfully clear these guys dont have a clue. They have barely touched upon risk management. They rather talk about mythical 400,000% returns, and 91% wni rates, and when you challenge them, they run and make excuses.


Quote:
Originally Posted by anley
See what I mean about people having no idea that the game is about risk management. To them it's all about maximising profit and to hell with how much is risked to make it.

Well here's an idea to get the max profit from your next trade - put 100% of your available capital on it

I love the way he chucks out the phrase 'if I have a 100% return on a trade' as if they're so common you can pluck them from a tree like apples in season.
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Old Oct 22, 2004, 5:16pm   #150
 
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Here is a primo example of someone being misled by people who dont have a clue.

The kelly # is the MAXIMUM value you should use and still have a good probability of not having a complete blowout, but it tells you NOTHING else. They Kelly formula is also only one of many risk of ruins formulas.

When you increase your percentage per position, your maximum drawdown will also increase.

If you have NO IDEA, what effect on your equity curve increasing this value will have, then you should not be increasing it. Further, you should not even be trading in the first place!

If you want to lose tons of money, listen to guys like these and bet big.



Quote:
Originally Posted by Roberto
It does indeed. (I've increasingly been realising as my strike-rate continues to get better that I ought really to be staking more.) Many thanks for your help, and continued good trading.
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