High Risk High Reward Trading

Discussion in 'Journals' started by Millionaire, Mar 7, 2018.

  1. IB, no i would not describe my stops as being large.

    In general i think tinkering with the system during losing periods, especially skipping trades, risks missing out on a big winning trade.

    If you make 100% five years in a row and then lose 70% in year six you still end up with 10 times what you started with.

    Thanks.
     
    #31     Mar 7, 2018
  2. JSOP

    JSOP

    ASSUMING you can make 100% with NO drawdowns (which is impossible) and ASSUMING for FIVE years and in year six, ASSUMING again you ONLY lose 70%. What if you made 100% (assuming with no drawdowns) in year one but ended up losing in year two, and losing 200% in year two? You would've blown up your account and wouldn't have any chance to make it to year three. You might be able to make +ve return in year three but you would never have any chance of knowing it cuz you won't have any money to make it.

    Like I said, it's NOT how much you make that counts. It's how much you CAN KEEP at the end. You made 100% in year one but can't keep it by year two, it's as if you made 0 unless you can control your losses.
     
    #32     Mar 7, 2018
  3. Ayn Rand

    Ayn Rand

    Again - why are you telling us all about your amazing system? Anyone with a winning system would have retired over the last few weeks.

    Secret - backtesting is a fluke. Again ceterius paribus. You have to assume that the people trading back then are the same people that are trading now. No.

    You have some numbers that look good but I would bet "all in " they are fake.

    Show the run.
     
    #33     Mar 7, 2018
  4. The aim of this game is to increase trading size. When i get to trading a decent size, eg 100 lots, i can think about taking money out of the account.
    Until then large drawdowns don't matter to me.
     
    #34     Mar 7, 2018
  5. Welcome to my ignore list.
     
    #35     Mar 7, 2018
    schweiz and Visaria like this.
  6. JSOP

    JSOP

    Large drawdowns, when you are increasing trading size is going to make you lose money even faster with the same profit return %. Because the problem is you NEVER know when you are going to make your next loss and for how much, it could be your next trade, it could be in the next 3 trades down the road and it could be 50% loss, 10% loss but it could also be 200%.

    Let's say your account size is $2000 total. With a trading size of 1K shares, with share price of $1, a 100% return will grow your account to $3K. So now you increase your trading size to 1.5K shares, if you make a 100% loss on your next trade with the share price now at $2, you are going to lose all the profit of $1K that you have made plus $500 more so your trading capital just got eroded by $500 from $2K to $1.5K. If you had stayed with your previous trading size of 1K shares, you would've just lost $1K and you would've still have your original trading capital amount intact. God forbid if you use margin to increase your trading size, then you could lose everything that you've made and have.

    Anyway, good luck!
     
    Last edited: Mar 7, 2018
    #36     Mar 7, 2018
  7. Ayn Rand

    Ayn Rand

    When I do great I do not tell everyone I am doing great. If I do, I expect someone to ask - "Show me the money." You have percentage out there that are interesting, but could mean many things.

    Show the run and get the respect.
     
    #37     Mar 7, 2018
  8. southall

    southall

    The OP is using high leverage to show high returns and he is also showing the risks that come with using high leverage.

    Assuming he is using 20:1 leverage, the un leveraged returns with be something like 5%, 10%, 2% for the three years given in his opening post. And the drawdowns would be like 2 or 3%.

    Then with leverage you can scale up those number to whatever is your risk tolerance.
    Some people might want to make 20% a year with max 10% drawdowns. Some 50%/25%. some 100% with around 50% drawdowns.

    It is the same system just with more leverage or risk taken.
     
    #38     Mar 7, 2018
  9. Visaria

    Visaria

    Sounds good, Millionaire. I do hope u r only using a small amount of your NAV.

    Best of luck!
     
    #39     Mar 7, 2018
  10. Ayn Rand

    Ayn Rand

    I go back to my original statement. If this guy is doing so well then why is he posting.

    I also adamantly claim that backtesting - unless there is a good theoretical reason - is a waste of time. At the heart of system analysis is "ceterius paribus". If the entities trading are not the same entities that traded in the past then ... and they are not.

    Go out and make several millions dollars and then tell us all about it.
     
    #40     Mar 7, 2018
    comagnum likes this.