Increasing Size During Drawdown

Discussion in 'Risk Management' started by oldtime, Oct 1, 2011.

  1. kut2k2

    kut2k2

    :cool:
     
    #191     May 14, 2013
  2. bone

    bone

    I think your old post answered your own question a very long time ago. Since you agreed with Keynes, a simple extension of that logic dictates that it would make no sense to increase size during drawdowns.

    I would personally recommend that after two successive losing days in a row, that you cut your sizing down in half until you can put together two winning days in a row. Then go back to your original sizing.
     
    #192     May 14, 2013
  3. kut2k2

    kut2k2

    I'm the guy who posted the correct Kelly equation for trading to this website but I don't have a degree in mathematics. There is a multi-sockpuppeted troll here who has a math degree but he hasn't seen fit to share much of that expertise with the rest of us.
     
    #193     May 14, 2013
  4. bone

    bone

    Maybe another thought would be to go through your daily statements, build a spreadsheet or whip out a legal tablet, and do the math for yourself. It's your own trading system after all and I'm sure that you trade differently than alot of other ET Members you are querying.

    How would your P&L look if you doubled your sizing after, say, two losing days in a row ? How fast would it have taken you to get back to even - or to burn through 50% of your account capital during the journey without seeing "even" again ? What was your max drawdown suffered during those periods ?
     
    #194     May 14, 2013
  5. If you respect him so little, why would he offer you anything?

    Try to convince Old time that my simple little system is mathematically more sound than his complex spreading mechanism. :D :D
     
    #195     May 14, 2013
  6. kut2k2

    kut2k2

    I never showed him any disrespect, that didn't stop him from being a troll. Fortunately I don't need his expertise, I have my own.

    Position sizing has been distilled down to a science. I've posted that science here. Anybody who doesn't get it by now isn't ever going to get it.
     
    #196     May 14, 2013
  7. The last person I remember talking about sockpuppets was GrandSuperCycle. Is that you GrandSuperPooper?
     
    #197     May 14, 2013
  8. don't trash my thread with personal attacks

    so far it has just been a misguided argument between mathematicians, gamblers, and opinionated losers who couldn't add size even if they wanted to.

    let's keep it that way
     
    #198     May 14, 2013
  9. kut2k2

    kut2k2

    I certainly see the aptness of the Simple part of your name. Welcome to my ignore list. Good riddance.
     
    #199     May 14, 2013
  10. at the time I asked, I had just started trading again so had no track record. The system in my opinion should have been 50/50 minus spread and commissions. I just tried to profit when it exceeded expectation. Then it went through a long losing streak, like 30 straight days. And that is when I began to contemplate the gamblers fallacy.

    I never did increase size, and sure enough, I got back to even and got flat. And have never traded that system again. Even though, to this day I think it is my most profitable strategy, but the drawdowns can be severe.

    but, in 20/20 hindsight, if somehow miraculously I had known where the bottom of the drawdown was going to be, I could have made it all back quicker by increasing size.
     
    #200     May 14, 2013