Increasing Size During Drawdown

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

  1. Sure you can do it , in demo , and you'll make money too.
     
    #61     Dec 16, 2011
  2. Only a fool would consider this as a viable money management option.


    Crazy A
     
    #62     Dec 16, 2011
  3. ammo

    ammo

    might be psychological, if you are right 70% of the time or higher, there is a mental high ,you feel invincible, aside from the fact that it's really hard to know when the other 30% is happening, it's harder to see because of your belief, you should trade small til your swelled head goes down, if this is the case,only a guess from experience,....... on the other topic of increasing size on drawdowns, one better hope it causes a sustainable loss so one doesn't make a habit of it ,the object is to contain risk and let profits run,if increasing at better prices was part of your original plan and it is within your planned alloted risk, that's another story
     
    #63     Dec 16, 2011
  4. Alcoeus

    Alcoeus

    It's not that much harder if you start increasing about after successful trades again.
     
    #64     Dec 16, 2011
  5. oh for crying out loud, some of you couldn't think outside a paper bag let alone a box

    system buys 100 shrs
    hit rate about 50%
    winners pay 4 to 1

    now after 20 straight losers do you move to 200 shrs? Not asking the mkt to have a memory about how bad it treated me, just asking it to go back and do what it always did and give me back my 50% rate.
     
    #65     Dec 17, 2011
  6. so it's been about a year now
    one thing I know, it's hard to make money in forex if you don't average down
    you can average down by price
    or you can stick to your classical principles (put it on with a stop)
    and average down with size

    it all started when I had some usd.jpy on I was monitering

    I fell asleep
    and when I woke up it had a fantastic profit

    I keep a computer by my bed, and I just rolled over and closed it out, and that paid for the whole month

    but it could have gone the other way

    at first I thought I was making all this money because I wasn't using stops

    but after that, I got to thinking how sick I would have felt if that profit was a loss

    so I am experimenting with classical trading again (put it on with a stop) and adjusting everything with size
     
    #66     Feb 8, 2013
  7. Why isn't that asking the market to have a memory? You are increasing size because of the recent departure from the norm ... you remember that and believe that makes it more likely to go back to what you consider normal behavior.

    The reality is that inherent in the law of large numbers is the reality that what you have observed in the losing streak is normal behavior WITHIN the methodology that you describe. Taking a subset of 20 losing trade as predictive of the next subset of 10, 20 or 100 trades is exactly the same as thinking if you see the ball fall into red a number of times black become a good bet of the wheel.

    Not the case.

     
    #67     Feb 8, 2013
  8. good answer

    now see?

    That's the kind of stuff I was looking for

    I use to know all this

    if the coin comes up 40 heads in a row, what's the best bet?
     
    #68     Feb 8, 2013
  9. There is no best bet. The coin does not have a memory. That's the point. It's not blackjack.

     
    #69     Feb 8, 2013
  10. no, the coin doesn't

    but the traders do
     
    #70     Feb 8, 2013