@Pace
You can’t know you won’t lose 2 times in a row. The stochastic nature of your wins and losses is the very reason we manage risk. Your argument is not applicable. You’re assuming you can predict that we won’t have losses because “data suggests so”. The data are averages, and the loss streak is a chance. You need a 100% win rate to never lose 2 trades in a row. Good luck.
Pace said:
@Archer
Obviously you can’t read… especially the part about how this is a hypothetical scenario.
What’s your point? So you made a hypothetical impossible scenario, what did we learn from it? That with a 100% win rate you can risk however much you want? Great, we already knew that. You can’t know you won’t have a loss streak longer than X, regardless of how much data you have. It’s a chance. This is why we manage risk.
@Archer
You’re such a stubborn person. It’s okay. It’s a normal response to when you’re wrong or simply can’t comprehend a conversation…
I’ll take you through it once more…
IF DATA SUPPORTS that taking an x amount of risk is sustainable, then that’s it. Period.
Over hundreds or thousands of trades taken, data is collected.
Over that period, your system provided a maximum drawdown of 3 consecutive losses, a winrate of 50 % and a risk to reward ratio of 1:2.
Risking 0.5% of your capital per trade on a system like that is FINE.
But mathematically not the most efficient way.
Ofcourse there has to be a fail safe “reserve”… because it’s not a fixed game. Its a probabilities game…
the point here is. You can easily risk as much as the math can take. (Minus the fail safe).
And if you’re really so nitpicking…
Having a 90% winrate allows you to very rarely get stopped out 2 times in a row.
So if you’re risking 5% on a funded account while having 12% available drawdown from the original balance…(even of equity) the risk of ruin is practically nonexistent.
I understand thats a bad scenario because no one has that winrate and no one wants to risk 5% per trade.
But thats not the point.
The point is, you can risk what the math allows. Not just what some dumbass online says about the 0.5% per trade rule.
@Pace
The math tells you the probability of you having a certain loss streak, when your win rate is X over Z trades. The problem with this is that it’s only applicable when your win rate is exactly X.This means that if you have an average win rate of X, you have had periods where your win rate has been X+Z and X-Z. The loss streak has a higher probability when your win rate is at its lower range, and therefore, basing the math on your average win rate is poor practice. The math doesn’t allow you anything, it simply tells you the probability over an average, and even then it’s not a hard fact because it’s based on averages. The sooner you realise this, the sooner you’ll stop arguing about how the data can determine how much you should risk. You cannot predict your results over a period, just because your history is averaging a certain win rate. How you get from point A to point B is stochastic, regardless of your average win rate. This is why we don’t base our risk dependent on our win rate.
@Archer
Fuck me if I haven’t heard this argument 100 times. If you are profitable, 1 % is fine. If I have to read this exact paragraph again I am going to gouge my eyes out.
Ming said:
@Archer
Fuck me if I haven’t heard this argument 100 times. If you are profitable, 1 % is fine. If I have to read this exact paragraph again I am going to gouge my eyes out.
If you’re profitable. You can be profitable for 10 weeks out of 12, or 6 weeks out of 12, maybe 11 out 12, right? What happens when you have the inevitable loss streak? So go ahead and gauge your eyes out. Makes no difference to me. But you know that having a 10k prop firm account with a 10% maximum drawdown, is basically a 1k account with 1:10 leverage.
About 4 to 6% a month
@Stuart
How much u deposit in that small account?
25-30%
I don’t know why everybody ask for that and when I show it to them…no reply, no nothing…just like xD
Flynn said:
I don’t know why everybody ask for that and when I show it to them…no reply, no nothing…just like xD
But anyway…here it is
Jensen said:
@Flynn
That’s awesome! Whats your strategy?
Keep it simple, just support and resistence is enough, but you have to understand the price action, to know where to draw it.