This is one of the amazing things about the human brain: it interprets the data based on its predisposition. When it has an opinion, all further data confirms it. So it happens that OddTrader, nononsense and I, all agreed with Bernards's thoughts. And we have no clue what he actually meant when he formulated them.
Yeah, but that's not our point of common interest. The question is as you put it yourself: "The theory", i.e. "How to make money speculating?" No kidding around with that one. nononsense
Awwwww, how cute and nice of Mr Nononsense to be the savior of the subtle minded speculators out there. He scavenges the threads of ET to rid us of nonsense. Now listen up you freak, no one on this thread is claiming to have anything to sell or claiming to have the holy grail. You mentioned before that risk of ruin theory was well known for tens of years.... SO WHAT? The fact that markets are complex and can challenge even the most theoretically informed of traders does not mean that one should not fully understand all tools to control risk, including their limitations! To understand, one has to investigate and discuss, which is what we were doing on this thread until it got trolled by idiots like yourself. If your only advice on money management is "Don't lose any", please, realize that you have nothing to offer. The Kelly formula is one way to begin to grope for an answer to the question of how much to risk. Cnms mentioned he uses 20% kelly to trade and the accompanying numbers for drawdown probabilities. They are not pixie dust, or holy grail, they are a candle in the dark you fool. Of course one has to try not to lose money to stay alive. Using a fraction of your fraction of the Kelly fraction is probably a decent way to derive a systematic way to derive position sizing, vs having to rely on useless platitudes/heuristics the kind you like to trumpet on this site, hoping for a gold medal of recognition. You haven't given one practical suggestion on this thread, not one as to how to go about not losing money. Now if you are looking for 'the theory' or a trading system, piss off because no one is going to hand you one. Here's a suggestion, why don't you email Seykota and call him a money management clown for posting some info on the Kelly ratio, expectancy and other things of the sort on his website. Tell him, "These things were know tens of years ago! clown!" Nononsense, you have as much common sense as a rock.
I suppose "% of your trading capital in every trade" assumes in this context daytrading, where you have only one position opened at any given time. The 10% Kelly fraction refers to the optimum risk for your whole account ...
Yes, the example is for one open position because otherwise I had to make a long heavy on math post to explain the idea. For example for opening two positions the analysis is something like this. The conservative approach will lead us to allocate 0.1 Kelly in the above example so we would risk 2% of our capital in each of the two open positions (total 4%). If only one position was available then 0.1 * Kelly would be close to 3%. If you want to trade more open positions simultaneously then either you use the math for normal like payoffs quoted above or you use a simplistic math treatment for calculating rough Kelly allocation fractions for your expected open positions.
Keep on reading your lill Seykota, you visibly need it. It can only strengthen your dreams of shining in the 95% heap. Lots of your buddies love that kind of stuff. MM is good for you, but don't forget about the trend - lots of possibilities for you to jerk off on that one too. nononsense PS "He scavenges the threads of ET to rid us of nonsense." If you had any "common sense" at all, you would know that with bums like you, that would be an impossible task.