Take Profit Not Triggered

  • Welcome to the newest version of Trade2Win! We're running on the latest version of, what we consider to be, the best forum software available today. Our aim was to keep things as familiar as possible but focus on improving speed, security and usability. We hope you like the result! Please post your questions, comments, suggestions and feedback in the What's New and Feedback Thread - Sharky.
Feb 20, 2017
93
18
18
#21
You can definitely succeed, I guess I was just saying keep an open mind about how you're going to get there. A lot of compounding simulations are just that and the stuff of pipe dreams, but a solid track record is gold so start thinking about the volatility of your drawdowns from day one. You don't want a track record with more than 20% d/ds when you decide, "this is the day I'm starting for real."
 

Brumby

Well-known member
May 25, 2012
600
136
53
#22
if someone is playing the percentage game then who are we to say 4% isn't proper money management? It may be more than you are willing to risk, or even for the next person but 4% is "proper money management"
Risk management is not just about containing individual position risk. When you cap your individual position risk at 4 %, slippage will extend that especially in markets like oil, gold or exotic currency pairs simply because of spread and liquidity. Proper money management is not just about managing individual position risk but the risk of ruin in trading. Risk of ruin is tied to the theory of numbers and the probability of string of loosing streak. When you have open positions of not just one but four at any one time you have to consider aggregate position risk in totality and not simply individual risk. The greater that risk percentage the greater your chances of risk of ruin to your account which many new traders experience.

There is an entire chapter devoted to risk of ruin in the book "The universal principle of successful trading essential knowledge" by Brent Penfold. I suggest you read it if you have a chance. Risk of ruin is a statistical concept that tells traders the probability of your chances of being ruined.
 

Nowler

Active member
Sep 13, 2017
757
51
38
#23
You can definitely succeed, I guess I was just saying keep an open mind about how you're going to get there. A lot of compounding simulations are just that and the stuff of pipe dreams, but a solid track record is gold so start thinking about the volatility of your drawdowns from day one. You don't want a track record with more than 20% d/ds when you decide, "this is the day I'm starting for real."

I understand.
I will be sure to keep it in mind as I continue to learn.




Risk management is not just about containing individual position risk. When you cap your individual position risk at 4 %, slippage will extend that especially in markets like oil, gold or exotic currency pairs simply because of spread and liquidity. Proper money management is not just about managing individual position risk but the risk of ruin in trading. Risk of ruin is tied to the theory of numbers and the probability of string of loosing streak. When you have open positions of not just one but four at any one time you have to consider aggregate position risk in totality and not simply individual risk. The greater that risk percentage the greater your chances of risk of ruin to your account which many new traders experience.

There is an entire chapter devoted to risk of ruin in the book "The universal principle of successful trading essential knowledge" by Brent Penfold. I suggest you read it if you have a chance. Risk of ruin is a statistical concept that tells traders the probability of your chances of being ruined.
While this is valuable information, I have rarely experienced slippage. I don't doubt that it's a risk, but how likely is it to happen, and then how likely is it to happen again? Keeping in mind I that the most exotic forex pair I would trade is the SGD/HKD. Typically I trade the majors and the most common exotics, and to a lesser extent, oil.

I also have put time into understanding market correlations too, so that I know my risk better. I don't have a strong understanding of it, but I know enough to keep an eye out to make sure I'm not putting on 2 positions which are strongly correlated. Or if I am trading 2 strongly correlated markets, making sure that I know I am and have a valid reason to.

I just managed to get a hold of a pdf version of the book, I'm not much of a reader but i'll have a close look at the Risk-of-Ruin part. I found a risk of ruin calculator online too, so I'll have a closer look.

Thanks
 

Nowler

Active member
Sep 13, 2017
757
51
38
#24
I just realised something... Those gaps I said I never see...
My broker's platform doesn't show gaps for some reason.
 

Attachments