How to lose at trading

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scratty
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How to lose at trading

Postby scratty » Tue Nov 30, 2010 7:29 am

MO mentioned it already. Dont even think about winning. Just start and lose professionally - as less as possible. So the topic is opened to exchange some ideas about how to lose to be successfull.

Here is what i am doing:

I structure the time into weekly trading. My first trade of the week is risking 1% of equity if i lose i will half my risk on the next trade (0.5%). If i lose again i cut it to 0.25% and so on.
Lose professionally!

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pika
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Re: How to lose at trading

Postby pika » Tue Nov 30, 2010 10:23 am

scratty wrote:MO mentioned it already. Dont even think about winning. Just start and lose professionally - as less as possible. So the topic is opened to exchange some ideas about how to lose to be successfull.

Here is what i am doing:

I structure the time into weekly trading. My first trade of the week is risking 1% of equity if i lose i will half my risk on the next trade (0.5%). If i lose again i cut it to 0.25% and so on.


Does reducing or increasing the risk level has any ability to change the odds of a trade outcome? If yes, then it makes sense to change it. If not, why change it based on the trade outcome? I think to lose as little as possible is not so much about how much capital is at risk, but how fast you can cut loss when the price action turns against your trade.

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Postby scratty » Tue Nov 30, 2010 11:16 am

Hi pika

Thanks for your feedback. The Risk level reduction/incrementation doesnt have an implact on the outcome of a single trade. The function of risk adjustment is to prevent you from diving into big losses whilst trading. The figures 1%/0.5%/0.25% are max. loss per trades if i cut it faster its less but if it is a loss i reduce my next risk level!

You are right too of course. Reducing risk is also archived by cutting your losses fast on a single trade

I think the combination of both is the best way to prevent from losing money in the markets.

Other thaughts?
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Postby scratty » Tue Nov 30, 2010 11:24 am

If you trade on a weekly base and you lose your first trade you lost "your" money compared to the start of the week! => Cut the Risk.

I only increase risk when i can play with "their" money on a weekly base. This is the case when i am in profit. But i dont think about it until i am there. I just keep losing professionally. This is the main philosophy.
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Postby pika » Tue Nov 30, 2010 11:31 am

scratty wrote:The figures 1%/0.5%/0.25% are max. loss per trades if i cut it faster its less but if it is a loss i reduce my next risk level!

This is saying you are willing to lose max 1.75% over 3 trades? If so, why not just set the risk at 1.75%/3 = 0.58% per trade? The results will be the same.

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Postby pika » Tue Nov 30, 2010 11:39 am

scratty wrote:If you trade on a weekly base and you lose your first trade you lost "your" money compared to the start of the week! => Cut the Risk.

I only increase risk when i can play with "their" money on a weekly base. This is the case when i am in profit. But i dont think about it until i am there. I just keep losing professionally. This is the main philosophy.


There is no such thing as "your" money vs "their" money in your account. There is only "your" money at risk when you trade. Conceptually you can separate your money and the money you win from the market, but this way of thinking is flawed because you are discounting the value of "their" money which is not true, since a dollar is worth a dollar regardless of which account the dollar is in.

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Postby scratty » Tue Nov 30, 2010 12:54 pm

Of course it is not "their" money anymore (It was some time ago). I think it is very helpfull from the psychological point of view.

I am not discounting the value of "their" money compared to "my" money. The opposite is true. When i am in profit i can take bigger risk which means (hopefully) bigger returns. So there is no big profit without "their" money. That makes "their" money more an up- instead a downgrade! It means i am more carefull with "my" money because it is the one that was earned "the hard way" :-).

Its just a was you look at it. But do as you prefere!:lol

pika wrote:
scratty wrote:If you trade on a weekly base and you lose your first trade you lost "your" money compared to the start of the week! => Cut the Risk.

I only increase risk when i can play with "their" money on a weekly base. This is the case when i am in profit. But i dont think about it until i am there. I just keep losing professionally. This is the main philosophy.


There is no such thing as "your" money vs "their" money in your account. There is only "your" money at risk when you trade. Conceptually you can separate your money and the money you win from the market, but this way of thinking is flawed because you are discounting the value of "their" money which is not true, since a dollar is worth a dollar regardless of which account the dollar is in.
:lol: :lol: :lol: :lol: :lol: :lol:
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Postby scratty » Tue Nov 30, 2010 1:07 pm

Mathematically true! 10 Points for you

The situation changes if there are not 3 losses in a row :shock:

In my opinion it is a good idea to have the smaller position after 3 losses (because something is out of synch) than go for the same risk.

Example1: 3 Trades 1, 0.5, 0.25 = 1.75
Example2: 3 Trades 0.58, 0.58, 0.58 = 1.75

But what happens to trade 4? ... :shock:

Here is the solution:
- Ex1: 0.125
- Ex2: 0.58
:wink:


pika wrote:
scratty wrote:The figures 1%/0.5%/0.25% are max. loss per trades if i cut it faster its less but if it is a loss i reduce my next risk level!

This is saying you are willing to lose max 1.75% over 3 trades? If so, why not just set the risk at 1.75%/3 = 0.58% per trade? The results will be the same.
Lose professionally!

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Postby TheRumpledOne » Tue Nov 30, 2010 10:57 pm

MightyOne posted this in another thread:

http://www.excaliburforex.com/Trading-Articles.html
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

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Postby TheRumpledOne » Tue Nov 30, 2010 10:59 pm

Play with this:

http://sotm.helproom.com/Install/Publish.htm

to learn "how to lose"
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

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