How many of the 'Market Wizards' blew up? Discussion in 'Professional Trading' started by Cutten, Jun 26, 2009. https://www.elitetrader.com/et/threads/how-many-of-the-market-wizards-blew-up.168151/ Edit: This book was written in 1989. I thought it was closer to 2000. Why do so many people keep referencing old "outdated" information?
Partly because some of it retains its validity and relevance, and partly because it sometimes gets updated, as well (for example, in this case, there's also a more recent book called The New Market Wizards).
Sounds about right - thanks. (I think the main books from which I initially learned to trade profitably, which still retain all their validity and relevance, were written in the 1970's.)
The thing of the 1% positioning is that you have to have either big winners or a very high percentage of winners to move the needle on your overall portfolio, don't you ??
No; you don't: it's enough to have a "reasonable" percentage of "reasonable-sized" winners, if you have a method that trades often enough.
Then you can be suspecious of me, Buckeroo. My capital was hard to come by, and I figured that if I "lost it all" I was out. Period. There would be "no restocking of capital... no 2nd chance". Therefore, I always traded with as tight of stops as I felt I could get away with. (Biggest mistatke I ever made... which I guess one could say was the equivalent of "blowing it all", though it was before the time when I started trading... 1st time I got enough money together, I paid cash for a BMW. Wish I would have bought MSFT stock instead... could have later bought a BMW DEALERSHIP with the gains.)
Correctamundo! By "1% positioning" I presume OP means "1% capital risk to the portfolio", not "position = 1% of the portfolio"(?). With a decent trading strategy, one can trade low-risk... by going 100% equity exposure with <1% stop. One can even have some leverage in the position and work within 1% stop loss. (You and I do so routinely.) More difficult to manage a portfolio of issues that way due to logistics, but one could trade significant size in the bigger ETFs and/or index futures that way.
I agree. It is hard to find anything wrong in what you say, dear Xela. But let me add one more thing to that. "Reasonable" is like risk. A matter of taste. What's reasonable for someone might not be reasonable at all for another. There's no golden rule that applies to everyone on this planet. We're all born different. We have different values, different goals and of course, live different lives.
Hmm... Tell me, if you expose 1% of your portfolio, how could you lose more than 1% of it, for the rest is not exposed? The percentages have been mixed up in the course of this discussion. It went from volatility to risk and finally to exposure. These are not the same thing. An exemple: By going 100% exposure with a 1% stop on some stuff that has a 2% daily volatility, statistically speaking, you may expect to be stopped out of your position in half a day or so.