If you can come up with a system that is 95% profitable, then you can refine it so it doesn't lose 35% five percent of the time. Traders simply can't expose themselves to that kind of risk. Basically you have to replenish your entire account every 60 trades, which is an absurd frequency unless you are making enough on the other 57 trades to warrant the risk, which is basically absurd risk. You say 5% are 35% loss...that's impossible to predict...if you trade 500 times, 25 will be huge losses, but while those 25 may be an average of -35%, some will no doubt be more. If its a profitable system, and everything you say is fairly accurate and duplicateable, then have 2 equal size accounts, using the second to fund the losses of the first. However remove all profits from the trading account so that principal is at risk, and available to reinvest if and when necessary. That's my take, but I'm with everyone else, a system that has such frequent massive capital fluctuations like that can't survive imo. (you also have to account for technical setbacks and errors, non-fills, etc. too) And I'm also with others too, not believing that any system could have 95% successful trades (especially since 1/2 of the trades are closing the position. )
Well, I'm not a top trader, but I do trade something similar with quite large drawdowns... I would suggest that you carefully compare your winning rate with the size of the drawdown. You may find, like I have, that you can reduce your drawdown while reducing your win rate some. Yes, you will reduce your expectation somewhat, but... The advantage of doing so is to reduce risk. Like others have pointed out, it's possible to get multiple losers in a row, thereby wiping out your account. Sometimes, this will happen as the market dynamics shift a little. With an average loser size of 35% of your equity, you can only suffer 3 of these before you're wiped out. Even a few winners in between won't change these odds much. With a smaller loss percentage, you have time to tweak if market dynamics change, and you're less likely to get hit by pure stochastics, or clustering of losses. From my experience, the losses do cluster together. It might be purely random, but I think it's more likely the short term market dynamics that are influencing the win/loss rate. I would also suggest that as your account grows, you do not grow your trade size in proportion, but at a slightly lower rate, thereby reducing your overall risk as your equity grows. Good luck! P.S. Your stats are not outrageous. It can be done.
excellent input SuckyTrader thanks Why you are not Sucky at all why pick such a name, humble is good but that's too humble thx
top traders, "even Hershey?" I'll have you know that Jack is onto something. Have you been alive the last two days and seen what the markets have to offer? Capital extraction, that is the name of the game.
Yes Jack is onto something, I just don't know what ehehehehe I mean look, guy is wealthy and he keeps talking market, so he is either crazy OR he is onto something.
The following C is intended to measure the "painfulness" of a system if traded in realtime. The bigger C the better A=average win/ average loss B=loss rate / win rate C= A-B if C<0.5 system not ideal for realtime trading if C falls in (0.5-.075) system can be traded , but there is stress and pain involved ,need to be improved if C falls in (0.75,1) good system, not stressful if traded in realtime if c>1 perfect system
Very good Joesan thanks now if only we could hear from Hershey, this thread would be finished I appreciate and thank all those who participated. finally a thread without flaming