I guess that's one less problem for me to think about there lol How does one know when the underlying context is understood? And is the understanding factual or deceitfully imaginary? I guess that's _the_ question..
So far only done against daily. But I'm starting to think that's not sufficient. As in, multiple timeframes is probably where I'll end up. But need to change the code for that lol
Simple, you can ride out the negative waves without destroying too many profits nor too much capital, assuming you had both those things in the first place. The system I use now targets 80% profit retention with the latest updates, before it was 50%, anyone classed as successful will target 5-20% profit retention unless they target lowball numbers of 1-2% per month then it goes up to 50-80%, this is the worlds benchmark number. If you take the inversion of 50% that is 200% returns, hedge funds will target retention for 15-20% profits, best not ask how these numbers work because it's institutional and is a waste of time explaining them, even if you understood it from top down it still probably wouldn't make much sense.
Do you mean that on a trade where i.e. £100 were made, you keep £80 and the remaining £20 you redeploy? If yes, interesting. And the rest in cash? or less risky assets?
Yes and no, the markets are designed to destroy your profits, if you target 100%pa you would expect to lose at least 80% of that in the course of the year but actually 95%, higher returns means more risk, it's why people only target lowball 1-2% per month because with experience they can retain 80% of the profits over the course of the year, that's what should happen but most don't get anywhere close. If you target 50-100%pa and retain 50% or more of the profits it is unheard of outside of places like Renaissance, if you retain 80% of the profits it means you are making 10x more than anyone here could make with the same effort and risk basis, if you can retain 80% of profits at 200%pa you are a rolling stone, for everyone else these are capital destroying numbers. I help people run family office, private funds alongside my own trading, it's simpler than running a hedge fund because everyone I work with just do not like investors, those investors want 50%pa or 100%pa with no concept that it's 10x more difficult than running 1-2% per month to keep 80% of the profits over the course of a year (which with volatility today they will end up with 80% retained at 7-10%pa, new dynamics in play), those investors discount this to zero so I'm more than happy that is exactly what they get! You can also look at it from another perspective, over the course of a year if you have to deploy 100% of capital to generate 15-20%pa while retaining 80% of profits, which very few can do even hedge funds today, if you can retain 80% of profits at 100%pa you only need to deploy 20% of capital and put the other 80% in bonds or real estate away from the markets, it makes for a very calm and secure life.
Very insightful answer. Thanks for that. From this I gather managing money for other people is a completely different ball game than for oneself. I imagine investors can be finicky, especially when the sky is full of clouds, even more so when it rains perhaps.. (metaphorically speaking)
Yes and no, most people do not understand the concept of protecting at least 80% of profits and capital, it really doesn't matter who it is but with experience they come back to 1-2% per month as the upper limit, I can generate higher returns at 80% protection (usually private fund and family office management), I know people who can go even further but they charge 4digit numbers per hour via 5&50 plus so you get what you pay for (you only have to deploy 5-20% of capital for 100% of the returns leaving the residual in non-volatile assets, it's a nice luxury to have, wealth management thing). Today it's different from even a few years ago, hedge funds at 2&20 on 15-20%pa would protect 80% of profits, today it will be protecting 50% making their gross 7-10%pa or they target 7-10% protecting 80% of profits, these are the 'behind the scenes' numbers causing large scale fund redemption due to the new dynamics (base numbers) of the world, even the 1-2% per month you see everywhere like here will drop down to 7-10%pa because at 1-2% per month they can only protect 50% of profits, obviously they will tell the world it's the old number but their returns will never match it over duration.