Aliassmith Beats a "Dead Horse"

[Captain Pugwash]

I had a chat with Brookmyre some years ago where we both agreed that the money management used by horse racing types (i.e professional gamblers) is far superior and robust than the MM used by traders.

This is now my personal risk and accumulation management. Stolen and bastardized from the work of Brookmyre - who came up with a basic idea called The Profit Engine. Very simply put - I had to work quite a few days solid to both understand The Profit Engine. And then to personalize Brookies idea to suit my own trading style.

Its founded on MO's idea of accumulation - but based on what I know I can do - not what MO thinks I can do

Its also founded on the work of Aliassmiths "All In Scale Out" (futurestrader71) idea.

i.e. I take a 2:1 trade and scale at 1:1 to give me an aggregate of 1.5:1 (as an aside Brookies initial concept of The Profit Engine was with a RR of 1:1 - just so we could get a handle on the math) - yes it does work even with one to one! - although you have to go back Two steps on the loss.

My growing realization of what MO has been saying for ever is pips do NOT matter - indeed, for me, these long moves on charts are just an illusion (well in my case anyway ) to keep me in future crap trades - till I get taken out! (indeed just look at all Mo's examples - there is never a long box made - the charts just about double a box size till he resets.

What matters is Lot Size - and its ALL that matters - and to accumulate size from a small initial risk size
Personally I have failed at adding 3 times - but I had to find what works for me.

This is my very new "Seven Steps to Heaven" space management.

The inevitable loss only moves me back ONE step (yes, just ONE step!)- and and the same time adds a bit into the kitty.

12 of these completed sequences adds a zero to my account.

Whats really important to understand is that you have to rebuild the idea to suit YOU and YOUR OWN style.

This is a work in progress and I may have made a math error - math is not in any way a strong point for me

2015-08-29_1439.png (77.69 KiB) Viewed 5881 times

(edit) - the reason I used units rather than simply the dollar amount is to make the whole thing scalable as I move through the sequences - having said that, rewriting the whole thing yourself in only the currency may make things easier to understand

[aliassmith]

I had a chat with Brookmyre some years ago where we both agreed that the money management used by horse racing types is far superior and robust than the MM used by traders.

This is now my personal risk and accumulation management. Stolen and bastardized from the work of Brookmyre - who came up with a basic idea called The Profit Engine. Very simply put - I had to work quite a few days solid to both understand The Profit Engine. And then to personalize Brookies idea to suit my own trading style.

Its founded on MO's idea of accumulation - but based on what I know I can do - not what MO thinks I can do

Its also founded on the work of Aliassmiths "All In Scale Out" (futurestrader71) idea.

i.e. I take a 2:1 trade and scale at 1:1 to give me an aggregate of 1.5:1 (as an aside Brookies initial concept of The Profit Engine was with a RR of 1:1 - just so we could get a handle on the math) - yes it does work even with one to one! - although you have to go back Two steps on the loss.

My growing realization of what MO has been saying for ever is pips do NOT matter - indeed, for me, these long moves on charts are just an illusion (well in my case anyway ) to keep me in future crap trades - till I get taken out! (indeed just look at all Mo's examples - there is never a long box made - the charts just about double a box size till he resets.

What matters is Lot Size - and its ALL that matters - and to accumulate size from a small initial risk size
Personally I have failed at adding 3 times - but I had to find what works for me.

This is my very new "Seven Steps to Heaven" space management.

The inevitable loss only moves me back ONE step (yes, just ONE step!)- and and the same time adds a bit into the kitty.

12 of these completed sequences adds a zero to my account.

Whats really important to understand is that you have to rebuild the idea to suit YOU and YOUR OWN style.

This is a work in progress and I may have made a math error - math is not in any way a strong point for me

2015-08-29_1416.png

(edit) - the reason I used units rather than simply the dollar amount is to make the whole thing scalable as I move through the sequences - having said that, rewriting the whole thing yourself in only the currency may make things easier to understand

Thanks for sharing. It looks like a realistic plan. You risk
.7% to get to 21% and then gear your risk back down and
start over again. My plan is similar but not as detailed. I'll
share it soon.

I like how you are taking an active effort in figuring out
your strengths and weaknesses and setting the ego aside.
It is definitely a part of developing a trading plan with
proper risk control.

[TygerKrane]

I had a chat with Brookmyre some years ago where we both agreed that the money management used by horse racing types (i.e professional gamblers) is far superior and robust than the MM used by traders.

This is now my personal risk and accumulation management. Stolen and bastardized from the work of Brookmyre - who came up with a basic idea called The Profit Engine. Very simply put - I had to work quite a few days solid to both understand The Profit Engine. And then to personalize Brookies idea to suit my own trading style.

Its founded on MO's idea of accumulation - but based on what I know I can do - not what MO thinks I can do

Its also founded on the work of Aliassmiths "All In Scale Out" (futurestrader71) idea.

i.e. I take a 2:1 trade and scale at 1:1 to give me an aggregate of 1.5:1 (as an aside Brookies initial concept of The Profit Engine was with a RR of 1:1 - just so we could get a handle on the math) - yes it does work even with one to one! - although you have to go back Two steps on the loss.

My growing realization of what MO has been saying for ever is pips do NOT matter - indeed, for me, these long moves on charts are just an illusion (well in my case anyway ) to keep me in future crap trades - till I get taken out! (indeed just look at all Mo's examples - there is never a long box made - the charts just about double a box size till he resets.

What matters is Lot Size - and its ALL that matters - and to accumulate size from a small initial risk size
Personally I have failed at adding 3 times - but I had to find what works for me.

This is my very new "Seven Steps to Heaven" space management.

The inevitable loss only moves me back ONE step (yes, just ONE step!)- and and the same time adds a bit into the kitty.

12 of these completed sequences adds a zero to my account.

Whats really important to understand is that you have to rebuild the idea to suit YOU and YOUR OWN style.

This is a work in progress and I may have made a math error - math is not in any way a strong point for me

2015-08-29_1439.png

(edit) - the reason I used units rather than simply the dollar amount is to make the whole thing scalable as I move through the sequences - having said that, rewriting the whole thing yourself in only the currency may make things easier to understand

Bravo Cap'n
seeing well thought out sh*! like THAT reminds me how fortunate I am to have found kreslik as a home base.

And,
similarly to alias, I suppose I have my own 'MO 2,4,6 Accumulation', plus, Risk Management strategy to share.

[aliassmith]

8)
Welcome to another episode of Alias beats a
dead horse.

On today's episode we will discuss the controversial
topic of risk management/ risk control. It is controversial
because some traders think its "not for them" or its
something they will work on later.

My personal opinion is risk control is a must have and
should be rule #1 in a trading plan.

Risk control can be done many ways and it has everything
to do with surviving to fight another day.

To survive the markets you should set your ego aside and
plan your risk according to your real skill level. You must
also look at your trading capital as business tools. If you
lose to much of your tools you will find it difficult to
maintain the same level of business.

to be continued.....

I will tell you my risk management process. I am sure it will look familiar.
My whole process is to not risk a lot of my "base" capital.

At the beginning of the year I have 100% of my business capital, my "base"
capital. Goal #1 is to not risk a lot of this capital, so I will risk .5% to 1% of
this base capital to make something happen. Typically it is closer to .75%

With this .75% I'll make some conservative trades and try to work it up to
about 4%. This 4% is a cushion now to help keep my base capital saved away.

I can start using 1% risk now and work it up to 20 something %, basically between
21% to 26%. At this point I'll gear my risk back down to .5% to 1% of the new capital
level, typically 1%.

Continue to repeat this cycle as much as possible. .5% to 1% risked to make 21% to 26%
As much as possible until the new year starts again.

If at any time I only have my "base" capital to work with, I'll go back and start again
like its a new year.

There are many ways to have risk control and this is one way that I use.

[aliassmith]

I began a new cycle today and I started it with
.69% of my account. I'll continue to accumulate
until I hit 22ish% and start again.

[Libertarian]

Hey Alias, thanks for sharing you bit about how you build up your account. I think I may be on the verge of being able to do just that. I wanted to ask you. I have been trying to follow the good Captain's MM he posted and I think I have a decent handle on it thanks to him and others. The problem I ran into is that I don't take a set number of pips or risk every time I trade like he has setup. I'm trying to take a hundred(s) pips and do that in as little risk as possible. I take one, two, three, stabs at it before I can pick up the "real" move, my win rate isn't good enough to trade like the Captain. That is why I like what you shared as I have always been a lot more informal in my trading (probably not a good thing, but who knows). I just started my risk really low (AKA the lowest possible) and have been learning to take the losses in stride (a HUGE mental barrier). Anyway, I know I need to start having a plan with my MM if I'm going to be adding a zero. The reason I wrote this is I see you said you started with .69% of your account, seems like a very specific number, any reason why you chose that? Also, any advice on folks that trade the way I described? I assume its just about getting to your waypoint and starting over, but I don't want to screw myself up before I even get started. Thanks.

[Captain Pugwash]

HIya mate

I do trade the same "RISK unit" but not the same Pips - if that makes any sense - but my risk goes up on each win after the first two steps (incrementally)

just to be clear I do NOT and never shall trade a fixed amount of pips (my stop has to be somewhere I feel safe with - fixed pips would jeopardize that for me)- I trade "units" which give me the same monetary risk whether I have a stop at 150 pips or 13.8 pips

you would not say that about my win rate after this week!

I will let you know when I add a zero whether this idea works - tho I am bloody sure it will ............ eventually

[Libertarian]

What a surprise, you're sitting at the computer and your the first one to respond

Hi Capn, yes sir, I should have phrased that differently, I know it's 1 to 1 scale and 2 to 1 risk. But I'm going to trade it to the places I see price going and that can be 1 to 1 but more likely 5 to 1 or more. That is what I'm having trouble making out of the profit engine, as if I achieve these targets, I'm going to have a lot more losses that push me down the step and then boom, I jump up 4 or 5 steps.

[Captain Pugwash]

this is good - as I say you HAVE to rewire the whole thing to make it your own - so it ends up something your are comfortable with

[aliassmith]

Hey Alias, thanks for sharing you bit about how you build up your account. I think I may be on the verge of being able to do just that. I wanted to ask you. I have been trying to follow the good Captain's MM he posted and I think I have a decent handle on it thanks to him and others. The problem I ran into is that I don't take a set number of pips or risk every time I trade like he has setup. I'm trying to take a hundred(s) pips and do that in as little risk as possible. I take one, two, three, stabs at it before I can pick up the "real" move, my win rate isn't good enough to trade like the Captain. That is why I like what you shared as I have always been a lot more informal in my trading (probably not a good thing, but who knows). I just started my risk really low (AKA the lowest possible) and have been learning to take the losses in stride (a HUGE mental barrier). Anyway, I know I need to start having a plan with my MM if I'm going to be adding a zero. The reason I wraote this is I see you said you started with .69% of your account, seems like a very specific number, any reason why you chose that? Also, any advice on folks that trade the way I described? I assume its just about getting to your waypoint and starting over, but I don't want to screw myself up before I even get started. Thanks.

It's just a value between .5% and 1% that happen to
fit the trade at the time.