High Risk High Reward Trading

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

  1. That's just hogwash!

    IMV... if you CAN take a 50% drawdown, you should NOT be trading. It's just a matter of time before you're busted.
     
    #51     Mar 8, 2018
    schweiz likes this.
  2. rb7

    rb7

    A backtest result that is giving me a 2.5:1 YearlyReturn:MaxDrawdown ratio is a big NO-GO for me.
    Too risky.
    I am aiming at a ratio around 10:1 or higher. A 50% drawdown in backtest will probably result in a 75% drawdown in real trading. Who can possibly recover from that type of loss??? I don't see a guy/gal saying "bah...no big deal, I just lost 3/4 of my money, I'll do better soon, I just need to keep going"...

    Backtest results are somewhat useful, but it has big limitations. It's only the first step when developing a new system/strategy/model for trading.
     
    #52     Mar 8, 2018
  3. southall

    southall

    The S&P makes what 10% a year on average? but you have to suffer circa 50% drawdowns sometimes, twice in recent memory.

    And millions of people investing in the S&P 500 over the long run where such drawdowns are likely to happen again.

    The OP reckons he can do 100+% returns with same sort of drawdown risk as the S&P 500 and you guys want to run for the hills.
     
    #53     Mar 8, 2018
  4. Only a FOOL would accept this as "normal".

    OP "recons he can make 100%"?. I'll take the under.
     
    #54     Mar 8, 2018
  5. southall

    southall

    If you invest in the S&P 500 for the long haul you better expect 50% drawdowns at some point for your paltry 10% a year returns.
     
    #55     Mar 8, 2018
  6. More HOGWASH!

    Not comparing B&H investing to trading.
     
    #56     Mar 8, 2018
    Xela likes this.
  7. rb7

    rb7

    50% drawdown in the S&P???????

    I should have missed something here....;)
     
    #57     Mar 8, 2018
  8. southall

    southall

    You obviously dont remember 2002 and 2008. and 1987
     
    #58     Mar 8, 2018
    JackRab likes this.
  9. Xela

    Xela


    Please excuse my mentioning that I think that's a terribly misleading characterisation of what's been described in this thread. The OP has those huge drawdowns all the time, whereas with the S&P they're rare. That's really a hugely different proposition.

    I'm not so much "running for the hills", but certainly I'm mentally dividing all the figures (drawdown and profit) by about 15, to make the apparent drawdown-risk acceptable, before seeing how good the profits look.

    Just my perspective (well, maybe not "just": it would clearly also be the perspective of any serious potential backer/institution ... not that they'd be willing even to look at theoretical results and/or results without slippage being included anyway, obviously).



    I have the feeling that (perhaps not for the first time) you've neatly summed up there, in two words, what somehow took me a few paragraphs to say. [​IMG]
     
    #59     Mar 8, 2018
    JackRab and rb7 like this.
  10. Chart of distribution of profits is in % and not money
    need to have guts to trade this system
    To withdraw profits each year would be prudent thing to do
     
    #60     Mar 8, 2018