High Risk High Reward Trading

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

  1. southall


    So only people not doing well should post?

    "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again." -- ROASO
    #41     Mar 7, 2018
  2. Ayn Rand

    Ayn Rand

    You are right. Some people who are doing well post. Not the best strategy but whatever.

    However on backtesting - It depends on how far back you are doing this and what kind of trading you are doing. There is an implicit assumption with backtesting that things are remaining the same. If this is not true the results will be skewed.

    To assume that trading today is even like trading 5 years ago would be - No

    There are some repeatable patterns over many years but most do not. There are many assumption behind repeatable patterns and if you miss some you will be wrong.

    "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again." -- ROASO

    Many things are new on Wall Street. Most are related to the Internet. I can still remember calling my broker to get a quote. Everything is much faster. And everyone knows more - quicker.
    #42     Mar 7, 2018
  3. southall


    If i showed you multiple price charts from 1918 and 2018. I bet you wouldn't be able to tell which are which. "The markets are always changing and they are always the same"
    #43     Mar 7, 2018
    rb7, soulfire and samuel11 like this.
  4. Ayn Rand

    Ayn Rand

    OK. I do not do this so I do not know.

    What I do know is that intraday is not the same.

    Also with all of the info and whatever how would explain that there is not difference?

    It just does not make sense - mutual funds vs individuals - computers vs whatever -

    How can it be the same?

    Not saying no but how
    #44     Mar 7, 2018
  5. JackRab


    How can your biggest drawdown be 20% in Jan-Feb when you're risk per trade is only 4%? Or am I reading that wrong? That 20% was over a week instead on a single trade?

    Also... if you're near full margin with futures through IB, that means a leverage of about 30x. Not much wiggle room to stay clear of that 4% per trade... especially in a fast moving market.
    Last edited: Mar 7, 2018
    #45     Mar 7, 2018
  6. 5 losses in a row, perhaps..
    #46     Mar 7, 2018
  7. JackRab


    So over a full week then... he doesn't really trade that much. Less than daily on average... 200 trades per year.

    So for him to hit that 50% drawdown... that's 12 losing days in a row... well, more if you take into account losing economies. About 17 losing days in a row at -4% each trade at one trade per day.

    Seems like a crappy system to me. The drawdowns are way to big... and the risk reward is just average really....
    #47     Mar 7, 2018
  8. JSOP


    I think he's posting just to challenge the sticking with a fixed % of trading capital of how much to risk and to demonstrate that when the positive return is high enough and consistent enough, it is not required and in fact the higher the amount to risk, the higher the return is and defeats further purpose of risking only a small fixed % of capital to trade.
    #48     Mar 7, 2018
  9. Agreed.The system might be somewhat viable one way only.Long, for e.g.
    #49     Mar 7, 2018
  10. I guess I think a bit different. I think about the money, forget all this drawdown stuff. And number of losing days stuff.

    If I had $1 million (provided i have $10 million sitting somewhere) in my account that I want to use for investing and grow my money and a trader approach and saying I have system with the back test results of
    Yearly returns:
    2013: +120%
    2014: +204%
    2015: +48%

    Largest drawdowns in each year:
    2013: -55%
    2014: -40%
    2015: -56%

    I ask him, "what does drawdown mean" and he/she responds "it simply means you may see your balance drop by 56% during the year, but it will recover and possible end the year on 100%.

    I am taking the risk and giving this trader $1 million of my money. I can careless if the account may drop 56%.

    To the OP, if you comfortable with the system and its return, go trade it or sale it. That's just my two cents.
    #50     Mar 8, 2018