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  • #1
  • First Post: Sep 7, 2012 6:36am Sep 7, 2012 6:36am
What you guys think of the following?

Let`s say you have a system(automated) that is good in itself with moderate drowdowns and has a positive expectancy on the long run. What if after let`s say one month you have a drowdown does it make sence to fund the account with double amount and trade it with double now risk in order to recover the drowdown faster? Notice at no point the risk was increased aditionally, we stil trade the same risk as persentage of the balance. Just that if one have temporaly funds available why not to use them for recovery... even if the drowdown period lasts for some time more it doesn`t mean there is aditional risk as we stil trade same strategy and same risk and it is well tested backward and forward.
I know someone may call it anchiety or even greed, but why not as long the risk is the same. And after that, after the recovery I would continoue trade with the initial and now with a bit bigger deposit.
I know you may say just trade with the max fund you have and don`t worry, yes it would work but the case is that the initial risk and fund suits me as it is and I just want to recover faster as I have the aditional fund available only for some time.It should be good for an account where you want a fast income from it every month/every second month and it would help to smooth the equity line.
It`s like you big brother running to help you when you are in trouble What are the pluses and minuses of it in your opinion?
  • #2
  • Sep 7, 2012 2:29pm Sep 7, 2012 2:29pm
This sounds like Mantingale in new mask, dont forgot still its a martingale with same plus/minus.

Quote
you have a system(automated) that is good in itself with moderate drowdowns and has a positive expectancy on the long run.
I have not find such thing, did u have any ...... pls share it
  • #3
  • Sep 7, 2012 3:56pm Sep 7, 2012 3:56pm
Quoting vijayanscbe
This sounds like Mantingale in new mask, dont forgot still its a martingale with same plus/minus.

I have not find such thing, did u have any ...... pls share it
in some way maybe, but you know I will not keep adding funds if the period of drowdown takes longer time just will wait it out and the risk loking at persentage of account at no point have ever increased. Even though it should not do serious harm as long the strategy works on the long run. Silly enough it is a comercial ea i do not want to say loud or promote here at a non comercial thread. It is a talk more in general, to get some opinions, and every strategy that has some kind of reliability on the longer term could be used, I guess.
  • #4
  • Sep 7, 2012 10:26pm Sep 7, 2012 10:26pm
Quoting Saintsurfer
What you guys think of the following?

Let`s say you have a system(automated) that is good in itself with moderate drawdowns and has a positive expectancy on the long run.
What if after let`s say one month you have a drawdown....
Ok, let's just talk about this much of it {quoted}. How long has it been profitable ??

Are you saying that the commercial vendor promised it is a "good" system.... and you are having drawdowns after the first month ??
If that is the case then you are being naive and you should not add funds. However....

There are a lot of variables involved that you have not shared. The market is expected to have increased volatility from here on (September >>). So, you would need to asses the strengths of your particular strategy. If you are just trying to recover a drawdown.... that is much the same as revenge trading.

The question is.... do you feel that the system will do well from this point forward ??

For example>> If the system struggled during the summer months, but is "expected" to do well in a more active market..... then that may be a good reason to put more money on it.

However.... it is a commercial EA, yes ?? How much faith do you really have in it ?? How long have you been using it successfully ??

The list of questions goes on.... you will need to ask them of yourself as well.
  • #5
  • Sep 7, 2012 11:35pm Sep 7, 2012 11:35pm
Quoting Saintsurfer
What you guys think of the following?

Let`s say you have a system(automated) that is good in itself with moderate drowdowns and has a positive expectancy on the long run.
You mean moderate historical drawdown. It's not like there's any limit to drawdown. The market keeps changing and your system's expectancy will surely change with it. Worst case scenario, expectancy may turn negative. That said, actual drawdown remains to be seen...

Quoting Saintsurfer
What if after let`s say one month you have a drowdown does it make sence to fund the account with double amount and trade it with double now risk in order to recover the drowdown faster? Notice at no point the risk was increased aditionally, we stil trade the same risk as persentage of the balance. Just that if one have temporaly funds available why not to use them for recovery... even if the drowdown period lasts for some time more it doesn`t mean there is aditional risk as we stil trade same strategy and same risk and it is well tested backward...
Sorry, you are being greedy. It's seems you have traded with too much risk from the start, and now fail to realize the fallacy in what you are about to do: adding funds to the account at this point will effectively increase risk. Never ever add funds into a losing account. That's like trying to extinguish a fire by pouring gasoline into it. If anything, you should reduce your risk by trading smaller as it should have been from the beginning. Learn to be patient. If the strategy really has positive expectancy, long term you will end up making money. Sorry if it sounds harsh. Just being real here.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #6
  • Sep 8, 2012 10:33am Sep 8, 2012 10:33am
Quoting Price
Ok, let's just talk about this much of it {quoted}. How long has it been profitable ??

Are you saying that the commercial vendor promised it is a "good" system.... and you are having drawdowns after the first month ??
If that is the case then you are being naive and you should not add funds. However....

There are a lot of variables involved that you have not shared. The market is expected to have increased volatility from here on (September >>). So, you would need to asses the strengths of your particular strategy. If you are just trying to...
Well, the point is not about particular strategy, just I answered the question what strategy I use. My intention was to talk about this kind of money management in general. Sure one need to trust the strategy in any way. But guys I think that most important sentence I wrote is that at no point the risk of my account was or will be increased, I will always trade same risk as persentage of the balance, and even I ajust the lot sizes acording to changing volatility. So if the volatility increases I set the risk down acordingly. Such things is very important, no doubt. even though the strategy is comercial, but I trust it`s edge it have and I believe it will stay profitable, most likely.
  • #7
  • Sep 8, 2012 10:39am Sep 8, 2012 10:39am
Quoting vox dei
You mean moderate historical drawdown. It's not like there's any limit to drawdown. The market keeps changing and your system's expectancy will surely change with it. Worst case scenario, expectancy may turn negative. That said, actual drawdown remains to be seen...



Sorry, you are being greedy. It's seems you have traded with too much risk from the start, and now fail to realize the fallacy in what you are about to do: adding funds to the account at this point will effectively increase risk. Never ever add funds into...
It is ok I am quiet selfcritical already and I ascept it. It is not about to be right, kind or something, just that as long I trade with properly risk I guess it should go.Sure there is aditional risk in general. And it all counts on the strategy and it`s stability, there is no guaranty for the strategy that it may lose it`s edge as there is no guaranty for nothing. At least you guys made me a little bit concerned. Thanks for your opinions.
  • #8
  • Sep 9, 2012 3:58am Sep 9, 2012 3:58am
Sure the biggest risk is on the strategy that it will remain profitable on the long run, or else it is almost garuanteed that the recovery will find place, especialy if you can add funds to the account again and again.
  • #9
  • Sep 9, 2012 7:17am Sep 9, 2012 7:17am
Hello,

Since that's a commercial EA, I guess you can't know what it does and how it does it. Let's consider this black box is a tiny fund management company; you are their only client...

If possible graph your account balance against time. Now imagine that's not your money but the index of performance of this tiny company.

What can you see? An erratic volatile mess or a nice uptrend? Is the current drawdown looking like a retracement or a reversal?

Now answer this question: "would you buy and hold their stock?" Because that's what adding money would be: a buy and hold strategy.
If the answer is yes, wait the recovery to start and... buy the dip! That would fuel the recovery process. And if the recovery never happens at least you lose no more money.

Unless my idea is completely stupid.....
No greed. No fear. Just maths.
  • #10
  • Last Post: Sep 9, 2012 7:27am Sep 9, 2012 7:27am
Quoting PipMeUp
Hello,

Since that's a commercial EA, I guess you can't know what it does and how it does it. Let's consider this black box is a tiny fund management company; you are their only client...

If possible graph your account balance against time. Now imagine that's not your money but the index of performance of this tiny company.

What can you see? An erratic volatile mess or a nice uptrend? Is the current drawdown looking like a retracement or a reversal?

Now answer this question: "would you buy and hold their stock?" Because that's what adding...
Very good point to wait for the knife to fall down, thanks. btw the graph shows an uptrend
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