whoever scanned that book did a terrible job. btw new market wizards is different than stock market wizards right?
Are we talking about predetermined scaling in levels and amounts or simply a wildman who doubles down?? There are certainly systems that favor scaling in....
No, a wildman who as the market keeps going against him will keep increasing his leveraged positions using an unlimited bankroll of make believe money.
Even if you have a nobel class scientific system of averagin down you are just one fat tail event away of getting wiped out (ask LTCM). Victor Niedderhofer is another manager that uses statistics a lot and doesnt like stop orders and he blew two times, and I consider the guy a genius.
With Steve Cohen's traders having a 50% - 55% win rate, what type of risk:reward is associted with such win rates??? If the r:r is 1:3 or 1:4, then any trader would be extremely desirous of even a 50% win rate... 50% win rate with a 1:3 or better r:r equals VERY WEALTHY!! Walt
It's all about money management. I recommend this journal to anyone who thinks otherwise. More losers than winners, and he's not only won the bet already but is up well over 50% now. I know he's for real because I spent most of the year in a trading room with him and he called all his trades live. http://www.elitetrader.com/vb/showthread.php?s=&threadid=148752&perpage=6&pagenumber=1 Sadly, he stopped posting do to a spammer who refused to leave his thread alone.
You really arent talking about averaging down,You are talking about being over-leveraged with no money mnagement.Thats the bottom line As for Vic,I went over his option positions a while ago,and his underlying notional on his short OTM put positions was so large relative to his equity that he was doomed to fail. Vic is one of the few traders who is a genius and a blithering idiot at the same time.There is simply zero excuse for the size/type of the positions he puts on the books.
I just bought this book. Can't wait to read it. Amazon's got some super cheap copies for those who are still looking.
"He is either bluffing or money mangement is really what makes the difference between the tiny percentage of sucesfull traders and the rest." I am going to dispute the premise here. His statement about the win rates and payoffs his traders achieve does not imply the secret is money management. If only it was "that easy." If one has a trading strategy that skews the results such that winners are much larger than losers while having a 50% win rate, this suggests a significant trading edge that THEN can be taken advantage of with money management. The fact is, if most traders really could get "much larger winners than losers 50% of the time" trading would be easy. If only it were so.