Protect your captial or let it ride.

Discussion in 'Trading' started by BoneFishGA, Nov 10, 2007.

  1. Some of the trading advice I've read is to...........

    "protect yourself from losses, preserve your capital."

    I've also read........ "don't jump in and out trying to catch every point move, ride it out if you believe in your predicted movement.

    It seems to me if you are trying to protect your account from too many losses you will have to get out of any position when it starts moving against you, and get out quickly.
    Is there compromise or do you just have to decide where your focus is going to be?
  2. I would definitely like to hear some opinions on it.
  3. Seems to me most of the drivel out there is useless because it has no context and no specifics.

    What timeframe are they discussing? What percentage allocation of capital are they talking about? Are they recommending hedging with options or looking at non-correlated markets? (until the correlation coefficient becomes 1 anyway).

    On the "predicted movement" - what is the reliability of it? What is it based on? Have you backtested it? Have you forward-tested it? Have you accounted for a Black Swan event?

    Too often I see these guys mouths move and say absolutely nothing.