Thought Id start this one going because its rather dead on this board at the moment and I suppose all my usual muckers are either at the Stella tennis event watching Dim Tim (lose again) or at Henly Regatta eating cucumber sandwiches (they wish,...NOT).

Anyway please feel free to just talk to yourself blast away and let it go on any company or subject you wish. Just wish Id thought of this one before.

cheers GF.

Alders,

I've no wish to tread on Fishfinger's toes if he's been helping you with a trading system, but, for you to have lost 22% of your pot in a single trade, it means that you're over-trading.

You should aim to be risking no more than between 1% (for large pots) and 3% (for small pots) on any one trade. That way, if you have a run of successive losing trades (which happens), your pot won't be dented to the extent that you won't be able to return to the table.

Whenever I analyse a particular system, I always run a Monte Carlo Simulation on at least 10,000 passes over a sustained period (normally 10 years), and the objective is for there to be a less than 0.1% probability of a 30% drawdown. Statistically, whenever a trader goes down by 30% of his pot, there is a strong probability that he'll pack up and walk away from trading, so the objective is always to ensure that the drawdown from peak balance never goes that high.

At 22%, you nearly broke the bank first time out. :o)

Seriously. You need to either tighten your stops or scale your position sizes down to limit your risk in future. Otherwise you'll be out of the game. And as Fishfinger said, you got lucky this time!

Hope that helps.

Hilary the system I have introduced Alders to is the 2 x2 system, you must have heard of it all the big houses use it, ie, no more than 2% of your entire portfolio risked and a return on your position of twice your risked downside on any one trade, plus a lot more with a trailing stop loss.

I use a hybrid of this which is far more stingy and althought I get stop lossed out far quicker and have more positions closed down, the winners which I let run, far exceed the original 2 x2 system.

Some wouldnt like it and say let your position breathe a little more, but it suits my style and Ive increased my profits 24% after back testing it after 9 months.

Perhaphs differing market conditions will take the edge away, I will have to monitor it.

ahhhhhhhh knew Id posted more than that last post for alders.....

goldfinger View goldfinger's profile - 18 Sep 2014 11:34 - 45897 of 45916 edit this post

Alders, not sure re-to 2-2 system and forex.

Best to stick to being a master of one trade rather than a jack of all trades.......well that is if you havent done forex before.

Briefly took it up about 8 years ago for 9 months and was pretty good at it but in the end found it boring and more akin to just gambling awaiting news all day.

I suppose it could be used but thier may be better suited risk/reward systems..........ends

Hilary your thoghts on risk/reward systems for Forex for alders, I believe just you and shortie practice it full time on the board.

There's nothing wrong with that, Fishfinger, although what I would say is that EVERY trading system is simply exploiting short-term inefficiencies in the market.

Trading is a three-player zero sum game where one player always wins, and extrapolation of a 9 month backtest may show that the system doesn't prove profitable in the longer term, unless your system uses a discretionary edge (eg. staying out of the market ahead of NFPs, which generally only comes with experience).

You may find that you need to run some walk-forward tests to regularly optimise the system.

Hilary your thoghts on risk/reward systems for Forex for alders, I believe just you and shortie pratice it full time on the board.

No different to any other market. Identify a trend on whatever timeframe you wish to use, trade only with the trend, set your stop just outside the bounding trendline, and size your position according the distance away that the stop is. And if you can't identify a clear trend, stay in cash.

Yep thats why on Trade Station you find so many systems have limited lifes. ie, because the market is forever changing.

Ive said before (and I know you disagreed) that the market is more often wrong that is right and I certainly dont believe in the principle of 'modern market efficiency'.

I think alders should stick to stocks and forget Forex and indicies for at least 24 months while he gets experienced in the ways of the IG trading platform and also the risk /reward system he is going to use.

I'd probably concur with that - FX does have a habit of frightening a lot of people away for a variety of reasons, not least because most rookie traders unknowingly over-trade as Alders did today. But that doesn't mean that it should be discounted completely.

Alders where are you????

http://undergroundmgzn.com/2014/09/17/queen-accidentally-shoots-alex-salmond-crossbow/

http://undergroundmgzn.com/2014/09/12/wales-reveal-theyve-already-left-uk/

http://undergroundmgzn.com/2014/09/15/exclusive-alex-salmond-birth-certificate-reveals-born-essex/

goldfinger

Just read yours and Hil's comment's and will take them on-board, cheer's.

No probs alders you know you have freinds to call up on.

just got tv on and breaking news says "Scotland votes no...prime minister talking to salmon.." ..what is he says to him...literally -"mega lol"?

more like "how much cash do you want?"

Big gap in favour of no. There is now a strong demand for an England only parliament in exchange for Scotland getting new powers. That will be with no Scottish MPs in our parliament. That, of course, means 41 less Labour MPs, 11 Liberal MPs and 6 SNP MPs. That's pretty much a regular Conservative majority.

RESULT!!!

not sure if that would be so .... i interpreted as meaning that scottish mp's could only vote on issues affecting the whole union .... or put another way, they would be excluded from those issues over which the "new" scotland had independent control in scotland (i think that makes sense)

Cameron has said this morning that the new powers for Scotland have to be done in the same timetable as changes to our parliament. The news powers are extensive and include income tax, NHS etc. That could means Labour having no influence on major decisions.

Unravel, the complications of false promises!