Risk Management

Qtip:
I don't think in those terms when it comes to trading. Instead of believing and hoping that I am right, I test to see what the past has been like. If you don't research, you are gambling and it is just a matter of time before the "house" takes your account a piece at a time. What I know about my method is that there is potential for streaks of 3-5 winners or losers at a time. Therefore, I scale in on winners, and out on losers. The way I am set up, if I have a string of losers, I will have to stop because my position size drops below 1, or because I have lost more than my daily limit. When I have a series of winners, I have less problem scaling in because I have confidence in my research. So far things have worked out pretty good. Best Regards, Steve46

 

A First! First time I've seen a fellow trader who likes Q-Tip and Tribe Called Quest. You know good music! PM/e-mail me the numbers when you can.

Wishing you the best in trading!

 

I think you may be changing your position size too much and too often. There does seem to be some serial correlation in the markets (leading to streaks), but I believe it persists longer than one or two trades.

No bet sizing scheme will change your basic expectancy, assuming you are trading consistently enough to even have an expectancy. Reducing bet size during an equity drawdown does however reduce risk of ruin, which is good. I believe the most important factor in bet sizing is keeping risk of ruin reasonable and staying within one's comfort zone. If you lose all your chips, you can't play anymore. If you burn out, you also lose.

 

Thanks so much for the compliments... I am also a huge U2 fan. Go figure, i almost love trading as much I love music. I will PM with some info.


qtip

 

Man, I always say, give me some good music, my trading laptop with wireless capablilities, put me on an island with my inamorata and that would be the GOOD LIFE!!

 

I really want to try the whole wi-fi thing but am afraid it won't work properly.

 

rwk,

Thanks for the insight. From your view, it wouldn't matter changing the position size as long as the money management of the entire account can handle to drawdowns. I mainly change position sizes because I want to limit the drawdown and hope to lose on a smaller contract size trade. Also, I am working a delta that when i make a certain amount of profits (i.e. %500), I will add another contract and go from 5 contracts to 6.


qtip