Leaving too much on the table, or losses

This is a discussion on Leaving too much on the table, or losses within the General Trading Chat forums, part of the Reception category; Originally Posted by Quantt One example would be betting size: if you read Alexander Elder's books where he is promoting ...

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Old Feb 7, 2018, 11:53pm   #16
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Quote:
Originally Posted by Quantt View Post
One example would be betting size: if you read Alexander Elder's books where he is promoting risking only 1 or 2 percent, but this could be under optimization compared to using actual data and Kelly criterion for example to calculate the exact for betting size for your strategy...

If Kelly calculation is returning let's say 6% for back testing of 20 years - this could be an over optimization, because the future winning and loses cannot be quantified...

In this case as suggested as one of the first quants, maybe half a Kelly is the best to be used in the stock market - 3% in our example...
Have you read any of Nassim Taleb's books especially the one titled "Fooled by randomness"? Essentially in investing, it works until it doesn't and that randomness plays a much more significant role than is normally understood. What is a truly representative market cycle?
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Old Feb 8, 2018, 1:59am   #17
 
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Originally Posted by Brumby View Post
Have you read any of Nassim Taleb's books especially the one titled "Fooled by randomness"? Essentially in investing, it works until it doesn't and that randomness plays a much more significant role than is normally understood. What is a truly representative market cycle?
Yes, I have red the book (and the one after long time ago) and I don't agree with everything he is saying... If I remember well the example was with the naked option traders, they'll win 1000 times small amounts and one time they'll lose everything and go bankrupt. You don't need an advanced degree to see this, just enough back testing... Which brings us to the market cycles - represented buy bull and bear periods, as we are right now in the 9th or whatever year of a bull market - easy to see on a chart....

Frankly, I don't believe the markets are random, I do believe they are actually trending, for example the chances tomorrow the SPY will be around the price it is today, it will not go to $200 tomorrow, $5 on Friday $1456 next Tuesday and $67 on March 5th...

And the fact that the markets are not random is what's enables us to actually make money constantly in the long run and there are a lot of examples of traders beating the market with different trading strategies...
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Count de Money number 1 trading rule: EDUCATE YOURSELF!

Before you trade even single penny on the stock market, please spend the time and educate yourself by back testing different trading strategies and ideas - go to eBay and search for "historical stock market data", you can buy 20 years of data for less than $100 - that's all you need to start.
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Old Mar 3, 2018, 8:33am   #18
 
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I still prefer trading on small amount of money, as it enables me to have a better control over the risks. If you risk everything, you can not only make a lot of money at once, but also loose it.
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Old Mar 3, 2018, 10:31pm   #19
 
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I still prefer trading on small amount of money, as it enables me to have a better control over the risks. If you risk everything, you can not only make a lot of money at once, but also loose it.
It has to be optimal: neither more or less or you'll lose money either way...
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Count de Money number 1 trading rule: EDUCATE YOURSELF!

Before you trade even single penny on the stock market, please spend the time and educate yourself by back testing different trading strategies and ideas - go to eBay and search for "historical stock market data", you can buy 20 years of data for less than $100 - that's all you need to start.
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Old Mar 20, 2018, 5:08pm   #20
 
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On the Forex market, you enter a trade with a loss whether you buy or sell a currency pair according to the spread. You have to overcome that intial few points loss, so you are advised to trade as low if you are not confident about your trades. You should have a money management plan for entering the trades.
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Old May 2, 2018, 1:30pm   #21
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I have no issues letting day trades run as I know tight stops kill day trading strategies but it is getting hard recently with choppy behavior having decent sized winners getting stopped at breakeven. Sometimes i wish i could just go for lots of small winners instead of looking for the home run trades.
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