Any help, or guidance about this is welcomed,
Laszlo
Laszlo
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DislikedThe highest risk I was ever advised to use was 3%.
So, in the famous Williams book,Long Term Secrets to Short term trading, Chapter 13, under " Money management- The Keys to the Kingdom" title, page 183:
"If You are Tommy Timid, use 5% of your bank, ...Normal Norma use 10 to 12% ..."
Am I missing something here? Or simple he advices too much risk to trade?
Any help, or guidance about this is welcomed,
LaszloIgnored
DislikedKeep in mind that there's a statistical confidence factor too. If you flip a fair coin 10 times you won't always get 5 heads and 5 tails. You'll get 6/4, 7/3, it can vary. It isn't until you flip the coin enough that the law of large numbers plays out and you get close to 50%/50%.
Why is that important? Because if your edge gives you a good entry 70% of the time, then that's 30% your edge will fail. Over any small number of trials you may have a large period of failures resulting in a large drawdown. If you're using too much of your equity you will not be able to survive these periods and will end up blown out before your odds can regress to their mean.
In other words you need to divide your pot into enough chunks so that you can survive to be confident that your edge will play out and not die during the bad times.
I suspect very few systems have an expectancy that could handle 10% equity risk in forex. You might be able to do that to some degree in stocks for various reasons, but I suspect that's a good way to go bust in forex.
I have a hard time risking more than 3% per trade initially. I personally prefer to scale in, I'll go higher than 3% if the trade is profitable enough that the 2nd trades stop will still leave me in profit, but then again that's not really risking 3% is it? =)
Perhaps we'd get a better idea of what he meant if you could also quote the context.Ignored
DislikedOK, please don t care about me and my trading. Those are OK.
My concern is that this is a famous and succesfull trader who says these things.
Is here Anybody who read this book and see what I misunderstood ?
THX, LaszloIgnored
DislikedLarry began to make the speaking circuits a few year ago, years after his
How I turned 10k to 1.1 million best seller dropped off the charts.
For a while he was running around the country w/ Jake Bernstein doing
seminars and such and he does have a lot of years under his belt.
His money management goes something like this:
1)First: Turn 10K into 1.1 million in a year.
2)Next: Write a book about it (or anything market related) and make a couple hundred more grand.
3)Then: Piss it all away in Vegas at the sports book.
Repeat steps two and three .Ignored
DislikedWait, didn't you forget a step? Something like don't pay taxes and get arrested in Australia for tax evasion?Ignored