Now that is a smart trade if you have the political clout to avoid prosecution. His "post trade" management in avoiding prosecition was the real skill. If the SOB was a bit more conservative on his leverage he would have had a very big winner. Every last one of those bonds were "money good" and every serious analyst knew it. The mark-to-market stopped him out and that extra leverage that greed induces was, as so often is the case, the killer.
So if your setup generates an X% win 95 times out of 100, and loses 0.66X% 5 times out of 100, then go all in every trade.
Give Jon Netto a read "One Shot One Kill". The concept that is very foreign to most here is that all signals for proper trades are identities. To explain this Look at an exit and an entry signal. the signals are identical and ALSO ARE IN OPPOSITE DIRECTIONS. Why this is true or not true depends upon the trader's knowledge and skills. As seen in this thread most comments are from traders who are not knowledgeable nor very skilled. A common characteristic for determining such is how much time a person spends on the sidelines compared to how much time that person is in the market. The normal process of an expert trader is to do hold/reversal trading and be in the market all of the time. The result is that he takes to full offer of the market all day long. As Greenspan has been explaining of late, he feels fear is much stronger and an emotion that is greed. Doing exit/entry comments is about being on the sidelines. Discusssing entry/exit is a commentary on fear, anxiety and anger for most limited traders. Greed is a discussion topic of have nots. Recognizing the "itdentiy" of an entry and exit is way past considering greed in any form. There is just no comparison possible when the market's full offer is compared with any lifestyle requirement for capital. It just insn't possible to spend the kind of money person can make by taking the full offer of the market. Expert trading using a hold/reversal strategy has little to do with market risk. What could be the context for raising the question? It has to be fear, anxiety and anger.
I appologize regarding my first post. I did attach a chart of the day's trades. I use volume signals (bottom pane) to have a leading signal of Price reversals(A reversal is an exit followed by an immediate entry. After an entry there is a hold in the direction of the color of the arrow on price). The boxes above the arrows on price are "turn" descriptions. a, b, and c are the "type" of turn and the lower line is the "before" and "after" type sentiment. D is for dominant and ND is for non dominant. I regard a signal to reverse from volume as a leading signal of price. So I am accustomed to beginning an exit and then continuing an opposite direction fill as a steam of market orders each of which is a set of partial fills. My accounts (11) are also sequenced by where they sit on the MAT list of accounts. I press a button, click a window to confirm and then my platform records the account statuses and lists for each account the number of partial fills to achieve the reversal. I haven't been posting prints since I found most ET members cannot understand what an MAT summary print sheet looks like or understand that costs appear with each trade and settlement of intraday trading only appears after the market closes. To review my trades on the chart I posted, just use closes of bars where the arrows appear on price. I also noted some "technique" attributes which improve (better than just closes of bars) the actual reversal's values through the application of skills. As you may also note I pass on some trades as a compromise when strong trending is taking place. Taking a trade that is Dominant to Non-dominant in a stong trend is not a reasoned approach. The example I provded was on an FOMC day. Calendar trading is preplanned and it is known how "news" affects markets. To simulate trades use your capital on my trading. My past prints were on the 100 contract levels in ES. I sweep weekly. If you read Pekelo's comments on my opening trade prints (Google to find them), you can inform yourself about how prints are not understood by ET members who post in educational theads.
You could save a lot of space when you post. Also, as a courtesy to thers*, when you do what you do they see my post. *the many many people who have me on ignore. At some point you may wish, quietly, to join that group. They seek an advantage of not having to consider stuff that could affect them psychologically (a la your penchant for happy faces used by children of all ages)
Here is my stab at it. If its a coin toss, then you have a 50/50 chance. So if you were to ask how much do you bet on this, I think as others are saying 2% sounds about right. I'm not well trained in statistics, but I think the idea that coming up heads in a coin toss 10 or 15 times in a row is quite remote... 20 times in a row would be incredibly unlikely. So if you bet 2% of your account on a 50/50, even if wrong 20 times in a row, you have only lost 40% of your account, and who the heck thinks a coin will come up heads 20 times in a row?? Now if you are saying you have 95% probability, then lets call this a 20 sided coin, and hence only one side of the coin, or rather 5% would be the bad side, and the other 19 sides would all prove to be winners if it landed on that side. So what are the chances that it even lands 2 times in a row on that bad side? Like I said, I'm not good at the math, but if I have this right, the chance of landing on the bad side 4 times in a row which has only a 5% chance would be 0.05 raised to the power of 4 or 0.000625%. Am I doing this right??? So I would call that extremely small, and I think that to lose 4 times in a row on that bet would be extremely unlikely, and hence I would bet 25% of my capital if I had a 95% chance of for sure being a winner given a coin toss that had 20 sides as in my example. I'm not sure how you arrive at a 95% chance of being right, but if this in in fact true, then being wrong 4 times in a row would be quite unlikely and risking 25% of you capital for each bet shouldn't wipe out your account. Hmmm.. then again, your chances of winning the lotto are even more rare than that and people do win every day, so maybe forget what I said! LOL
Hi: There are of course mathematical formulas to determine the optimal bet size (in percentage of your trading capital) if you know your odds of winning the bet (trade) and the payoff, Kelly criterion for example: http://en.wikipedia.org/wiki/Kelly_criterion In games with negative mathematical expectancy (lotto for example), that Kelly percentage is of course less than zero, in other words never bet.