Tom -- once aqain, you know I am a very long term guy here, and
I don't mean to beat a dead horse - but are you saying that you
approach the spy system assuming that the trade could in theory go
to zero, and you allocate accordingly? That makes no
sense. What would be a rational allocation for a trade with
the risk of losing all your money? I really don't get it. The
basic mantra of trading everywhere, including this site, is to set
stops, know your exits when you enter the trade, define risk.
If the risk is 100%, I don't know - seems to me there would have to
be an awful lot of reward.
If you assume the trade could go to zero, the only answer I come
up with is that the allocation has to be so small relative to
account size, that it won't bother you to lose it all. What
would that be -- 2%? So with a $200,000 trading account, one
could put 4000 into the system, un-levereged. With a 100,000
account it would be 2000 per trade. Just thinking out loud
now, I haven't thought about it until I read your post -- I just
don't know if its worth bothering with it for that amount of
money.
Did I misread your post?
And don't get me wrong -- I'm trading the system, I've never
complained about a trade, and I imagine there is every chance that
the current trade could end up very profitable. I'm not being
emotional here, I'm just trying to understand the answers that you
are giving.
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Tom -- once aqain, you
SPY System Performance vs. Market since first trade
Posted by Michael on 21st of Oct 2011 at 08:54 pm
Tom -- once aqain, you know I am a very long term guy here, and I don't mean to beat a dead horse - but are you saying that you approach the spy system assuming that the trade could in theory go to zero, and you allocate accordingly? That makes no sense. What would be a rational allocation for a trade with the risk of losing all your money? I really don't get it. The basic mantra of trading everywhere, including this site, is to set stops, know your exits when you enter the trade, define risk. If the risk is 100%, I don't know - seems to me there would have to be an awful lot of reward.
If you assume the trade could go to zero, the only answer I come up with is that the allocation has to be so small relative to account size, that it won't bother you to lose it all. What would that be -- 2%? So with a $200,000 trading account, one could put 4000 into the system, un-levereged. With a 100,000 account it would be 2000 per trade. Just thinking out loud now, I haven't thought about it until I read your post -- I just don't know if its worth bothering with it for that amount of money.
Did I misread your post?
And don't get me wrong -- I'm trading the system, I've never complained about a trade, and I imagine there is every chance that the current trade could end up very profitable. I'm not being emotional here, I'm just trying to understand the answers that you are giving.