I am bored of small wins. Would it be dumb to risk more to make it rich?

Discussion in 'Trading' started by Steven W, Jun 24, 2019.

  1. Snuskpelle

    Snuskpelle

    Suggestion, be scientific: Produce a list of your trades, with columns for P/L and trade size (in $). From this list, simulate effect on your starting equity (which should end up with your final equity before modifications). Then, you should be able to experiment with different trade sizes and study the effects on your account for this particular sequence of trades. Note that you might want to simulate both fixed and scaling trade sizes with this, even if you used one or the other originally.

    If you want to go even further, you can use Monte carlo simulations to test random sequences of your trades, as well as using Kelly criterion to figure out your theoretical optimal betting amount. All of this things can tell you what size you should be able to trade (assuming you don't psychologically falter) and assuming you can take on the tail risk if you get a worse outcome than so far.

    Good chance to learn Python if you don't already know a language, lol. But I assume this is the kind of thing that should be reasonable in Excel too.
     
    Last edited: Jun 24, 2019
    #11     Jun 24, 2019
    coplii and tommcginnis like this.
  2. traider

    traider

    never risk what you have for what you dont need
    - richest man alive
     
    #12     Jun 24, 2019
  3. It only takes one black swan event to erase a few weeks or months worth of profits. Just ask any pro portfolio mgr.......
     
    #13     Jun 24, 2019
  4. You have to decide how to increase your trade size. Larry Williams used very aggressive money management to win a trading championship, but later switched to Kelly method (calculate amount risk based on largest loss) because the drawdowns were too big.
     
    #14     Jun 24, 2019
    tommcginnis likes this.
  5. tomorton

    tomorton

    You should be thinking in percentages not dollars. Decide the maximum risk in terms of account capital and stick to that percentage no matter how big (or small) your account gets.

    Focusing on dollars will make you greedy. Focusing on percentages will make you a better trader.
     
    #15     Jun 24, 2019
  6. Robert Morse

    Robert Morse Sponsor

    Yes, that jump is too much. You can scale your trades higher though and that would make sense.
     
    #16     Jun 24, 2019
    murray t turtle likes this.
  7. dozu888

    dozu888

    go for it... $130k is peanuts.
     
    #17     Jun 24, 2019
    murray t turtle and jl1575 like this.
  8. tommcginnis

    tommcginnis

    Keep in mind that the people who trade like you are implying, are no longer here to comment. o_O
     
    Last edited: Jun 24, 2019
    #18     Jun 24, 2019
  9. You might find trying to make "$30k or so" per day to be too exciting.
     
    #19     Jun 24, 2019
    murray t turtle, d08 and tommcginnis like this.
  10. Do you folks really believe this stuff??

    Keeps the site active I guess, why it's a social network not strategic
     
    #20     Jun 24, 2019