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Rationale behind "Risk Per Trade" and "Risk/Reward Ratio"? 8 replies

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Attachments: Risk Reward Ratio is not used for making money
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Risk Reward Ratio is not used for making money

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The market is all changing and adapting.

Yet always stays the same. Markets operate under the same natural behaviour.

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It gives and when the right time come, it takes!

The market doesn't take, a portion of participants do. The market is not an entity, it is a group made up of all participants.

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Of course, the market is smart.

Participants are smart. Participants are stupid. The market is neither, just the result.

Quote
No way! You cannot assume anything. Have you ever heard of the
almighty honing BLACK SWAN that will kill your account in no time.

Black swans are only black swans to those who are unprepared. There are a few risks to my account, but they come in the form of world wars, alien invasions, and the apocalypse, in which case a busted account is the least of my worries.
  • Post #42
  • Quote
  • Edited 9:05pm Nov 10, 2009 9:00pm | Edited 9:05pm
Wow, the "market stays the same".
What about NFA rules?? What about FIFO???

And you talking about preparedness. Why bother daytrading,
if you are that rich. Most of us are probably not rich like you.

All the preparations in the world will make you a LOSER when
the black swan hits. It is like losing streak into tilt!

Preparation is meaningless.

And just because you don't see the market changing; this does not mean it is the same!

And if truly you believe that the innocent customers are usually on the opossite end, you
must need more education. We know that banks don't do straight through processing, neither
does the market maker. Why act smart?
Quoting charlyher
The market is all changing and adapting. It gives and when the right
time come, it takes! You will regret it by being so overconfident
and loaded with foolish pride.

Of course, the market is smart. It is willing to lose little, but it will
take a lot more when the time comes. All the positive expectancy
and risk reward is PURE assumption that the number will continue that
way.

No way! You cannot assume anything. Have you ever heard of the
almighty honing BLACK SWAN that will kill your account in no time.

It is like having tails come out all...
If one trades with exposure to black swan events then so be it. Once again you have missed the point. THE MARKET IS NOT AN INDIVIDUAL, THEREFORE IT TAKES NOTHING. The market is a medium for exchanging buy and sell orders, therefore there are winners and lossers, not a vacuum which wipes the board clean and laughs while counting your money.

All the expectancy and risk rewards should be formulated around and into a plan, a model which used over time will generate profits. This doesnt always occur and the fact remains that few people stick to there plans when the going gets tough. The ones that do usually come out the other end in better shape then though flip flopping from system to system. If you really believe all the BS that you spin, if your are so CONFIDENT in your words, then why are you here.

I take it you have been burnt a few too many times and because you are unable to succeed your self ego has deluded you into thinking because you failed there must be no way. There has to be a higher order and that higher order is the single 'entity', the market that growls, snarls and drools over the trillions of dollars at play and is out to get everyones money. Please I dont even know why I am repling to you, possibly its because im looking to humour myself.

Razor
Quoting charlyher
Wow, the "market stays the same".
What about NFA rules?? What about FIFO???

And you talking about preparedness. Why bother daytrading,
if you are that rich. Most of us are probably not rich like you.

All the preparations in the world will make you a LOSER when
the black swan hits. It is like losing streak into tilt!

Preparation is meaningless.

And just because you don't see the market changing; this does not mean it is the same!
Now im really laughing. NFA rules, FIFO, come on man are your serious. One area of the world makes some minor changes to there regulations and setups. Yet you just add ????????? to make it look like your onto some huge conspiracy. MR J was right, you better locate that tin foil hat of yours, it would seem they have already got inside your brain.

Now heres a question for you. Have you ever traded??? -- ill add another one just for good measure --->?
Quote
Wow, the "market stays the same".
What about NFA rules?? What about FIFO???

My response was to complete the common proverb "The more things change, the more they stay the same". The market does change, but it doesn't. New rules, technology, methods etc are introduced, but markets operate by human behaviour, and this is quite consistent over time.

Quote
And you talking about preparedness. Why bother daytrading,
if you are that rich. Most of us are probably not rich like you.

I never said I was rich, and one doesn't have to be rich to be prepared. In fact, I welcome the next "black swan", as long as it isn't too great a disaster to handle, because times of adversity bring opportunity. One person's black swan is another's pay day.

Charlyher, you're psyching yourself out. The market is not some all-knowing powerful entity out to destroy everyone. It's made up of people, and most of them are not too sharp.
I suggest you reread my last paragraph. You are obviously too
quick to argument. Go back up and reread my last paragraph.
Don't assume that I have been burned. Because I am not.
My intention here is to help the dumb. I am all knowing, how can I be
burned??? Of course, unless there was total chaos, meltdown, and
complete manipulation, then I might lose.


But, don't assume that I am burned because I am not. I am the
sun the shines everyday. I am the source. Therefore, I shine.

I am simply here to help the beginners, the difficulties they will face.
Quote
And if truly you believe that the innocent customers are usually on the opossite end, you
must need more education. We know that banks don't do straight through processing, neither
does the market maker. Why act smart?

I didn't say that at all, and if you believe that the evil, always correct bankers etc are on the other end, then you're taking the other extremity of the scale. A bank that takes the other side of my trade is not likely trading against me, and if they are, why should I fear? Everyone in this market is just human.
  • Post #49
  • Quote
  • Edited 9:58pm Nov 10, 2009 9:53pm | Edited 9:58pm
What I am saying is this, you could be making more money.

But, you obviously are too rich or too stubborn to listen.

Who would not want more tips or secrets to add more profit?
Obviously, you are more into arguing for argument sake than
for winning.

My presence in this thread is to say that "expectancy", "risk reward ratio",
and all the fancy stuff by the book is not the holy grail. And this means
a good size BLACK SWAN can wipe you out.

I have a better solution, but sense I am offended by all the unecessary replies:
I will not give out my strategies or tips.

Ha! Humanity is really travelling back ward at the same time it is going forward.
Quoting charlyher
What I am saying is this, you could be making more money.


My presence in this thread is to say that "expectancy", "risk reward ratio",
and all the fancy stuff by the book is not the holy grail. And this means
a good size BLACK SWAN can wipe you out.
.
If you ALWAYS use a Stop Loss and if you ALWAYS limit your risk to a small percentage of your account, then a Black Swan event is nothing to be worried about.
I think that you have traded without a Stop Loss and with a massive percentage risk and with an ego that would not admit that you were wrong in your trade. And you got blown away by the market
Quoting charlyher
But, don't assume that I am burned because I am not. I am the
sun the shines everyday. I am the source. Therefore, I shine.
Wow.
I just have one question: why is anyone here even wasting their time responding to charly? Go trade or something.
Quoting charlyher
No way! You cannot assume anything. Have you ever heard of the
almighty honing BLACK SWAN that will kill your account in no time.
Its entirely due to Black Swans that I'm able to do what I do
Charleyher, if nothing else, you have given me a good laugh!
Quoting charlyher
Don't assume that I have been burned. Because I am not.
My intention here is to help the dumb. I am all knowing, how can I be
burned??? Of course, unless there was total chaos, meltdown, and
complete manipulation, then I might lose.


But, don't assume that I am burned because I am not. I am the
sun the shines everyday. I am the source. Therefore, I shine.

I am simply here to help the beginners, the difficulties they will face.
You protest too much. You and your account have been burned to ash.
Because you have taken a loss and killed your account, you think that everyone else will be as stupid as you, and you feel the need to warn people away from trading. You need to look at how you have traded and learn how to trade.
Do you even know what a black swan is????
Why do you reply with, "I got stoploss". I don't worry about black swan.

Go figure what a black swan is first.

Anyhow, "RISK:REWARD" is a dead concept. Since you are
so into risk and reward. Why don't you go on and keep buying
a bunch of lottery tickets. The risk is low and the reward is really
great. I doubt that you will ever win. Ha!

And next time you reply, learn first. Don't reply blindly. A black swan,
ha I got stoploss. I ain't worry. This shows you don't know what you
are talking about.
Quoting kharvell
I just have one question: why is anyone here even wasting their time responding to charly? Go trade or something.


Yes! I totally agree...


For all your Trolls out there, thanks for killing my thread with stupid posts!
I were hoping for a good dialog between traders and all I see is accusations and facts that are wrong...

If you don't have anything good to add, leave it... We are actually spending time reading what you are writing...
Quoting charlyher
Do you even know what a black swan is????
Why do you reply with, "I got stoploss". I don't worry about black swan.

Go figure what a black swan is first.
.
A Black Swan event is an event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict. This term was popularized by Nassim Nicholas Taleb, a finance professor and former Wall Street trader. (answers.com)
When an Black Swan event occurs, your SL will get you out at the earliest. Without a SL, you take all the loss of the Black Swan event.
  • Post #59
  • Quote
  • Edited 2:32am Nov 11, 2009 2:15am | Edited 2:32am
Are you trying to save face???
Do you know the consequence of a Black Swan and your silly stoplosses????

Imagine your stoplosses hitting you solid in the face 100
times in a row, or constantly hitting your stoplosses.

Would you agree that you will be broke if your stoplosses
are constantly being hit??????
Just some winnings only and you are out the door loser!

Sooner or later, you will face this.
I hope not because I want everybody to succeed!

This is the same concept as buying a lottery ticket.
If you are hit with a Black Swan, you will lose 300 - 400 times
in a row. You never got the chance to win enough for recuperation.

You will end up crying! Same thing for a lottery ticket!

Obviously, you did not really know what a Black Swan is or was. You had to look it up.
At least, be honest that you went and looked it up.
Final comment: If big money managers from big banks and corporations
can breakdown, what makes your (stoploss and rr) any better???

Huh, punk? You think are better than the high big money managers??
Suddenly, you are way better than money managers....... This proves
the point that money management can only go so far.
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