High Risk High Reward Trading

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

  1. If a trader isn't smart enough to avoid a "50% drawdown", how likely is it that he's smart enough to make a "+100%" gain?

    OP is inferring, "I'll take 50% drawdowns as common, cost of doing business"... but I'll "make 100% just as easily and make up for it".

    I'll take the under.
    Last edited: Mar 8, 2018
    #61     Mar 8, 2018
    comagnum and Xela like this.
  2. southall


    It is the same risk, just time compressed.

    In the S&P you hold for 15 years and earn 150% then you get wacked with a large drawdown and you then have to wait 5 years to recover back to the highs.

    The OP is earning 150% in six months and then he gets wacked by a large drawdown and it takes 5 months to recover.

    For some reason you guys think the S&P is much lower risk because the same sort of scenario plays out over a longer time period.
    Last edited: Mar 8, 2018
    #62     Mar 8, 2018
    lovethetrade likes this.
  3. comagnum


    A 50% loss will requires a 100% gain to recover from, even the best traders would be lucky to dig out of draw downs like that inside of a few years. It always looks easy on a back-test, not many have the conviction, discipline, patience, guts, etc. to stay with a bleeding system very long.

    Bill Dunn is one of the best trend traders of all times - he has always recovered from his draw-downs on his way to new equity highs. His investors are high net-worth and are chosen carefully.
    Last edited: Mar 8, 2018
    #63     Mar 8, 2018
  4. It took me just 9 trades to recover from the bottom of my most recent 47% drawdown (live trading not backtesting). And 3 of those 9 trades were losing trades.

    When risking 4% per trade, it doesn't take long to make 100%. When the markets are in synch with my method i can make 20+% on a single trade. And those trades are often like buses, you can wait five months for one to appear but then all of a sudden you get 5 in a month.

    According to your chart:
    Dunn averages 17% p/a and has >50% drawdowns
    S&P averages 12% p/a and has >50% drawodowns.

    I make over 100% p/a and have >50 drawdowns.

    Big difference is my system doesn't scale to 1,000 contracts or more, and that is probably why i can out trade Dunn by a large margin.

    Dunns numbers aren't that hard to beat anyway, 17% p/a with 63% drawdowns. I would be embarrassed by those numbers.
    But on the other hand 17% on 1billion is $170 million profits a year, is always impressive.
    If not even sure my system could scale to making just 1.7 million without a drop in performance due to extra slippage
    Last edited: Mar 9, 2018
    #64     Mar 9, 2018
  5. southall


    Reading the DUNN capital website:

    DUNN Capital has been led since 2007 by Martin Bergin.. the President and Owner of the firm

    So did Bill Dunn give up and sell out near the bottom of his longest drawdown?
    #65     Mar 9, 2018
  6. comagnum


    Dunn is at all time highs - of course they survive draw-downs, they chart makes that loud & clear. Most traders that take on large draw downs & survive are few & far between over the long haul. Dunn C. has been in the top 2 CTA's world wide. Dunn is old, he is semi retired. Bergin has added in short term trading to smooth out the equity curve which have been doing good while their trend following strategy remains unchanged.

    98% of day traders will not be able to make a living from their trading for 2 years. Yet many have delusions of grandiosity thinking they will be the best traders the world has ever seen. Those without strong $ mgmt would be better off in a casino where their odds are better.

    Dunns shorter term funds.
    Last edited: Mar 9, 2018
    #66     Mar 9, 2018
    Van_der_Voort_4 likes this.
  7. southall


    It think it was Buffet who said he could make much higher returns if all he had was a $1million account.
    Someone with $1million or less account can beat the best traders because those guys have a $10 billion millstone they need to put to work.
    #67     Mar 9, 2018
    schweiz likes this.
  8. Yes this is in general true and we all know it. But ofcourse doesn't apply to every retail trader out there.

    Personally i am well capitalised and have a detailed trading plan written in software which is extensively backtested and carefully designed to avoid as much overfitting as possible.

    I am not the best trader in the world, no where near it, i am just pushing my leverage to the limits of what i can handle.
    Last edited: Mar 9, 2018
    #68     Mar 9, 2018
    comagnum likes this.
  9. schweiz


    He posted this:
    System stats for the period (2013-2015)
    Number of trades: 532

    Period of 3 years means 3*52 weeks= 156 weeks.
    532/156 is only 3.4 trades a week average. Tat's less then1 trade a day.
    #69     Mar 10, 2018
  10. schweiz


    Very smart remark.
    #70     Mar 10, 2018