It's a quite day so I'll make a few general comments.
Successful trading
Successful trading is like getting pregnant. Everyone congratulates you when you manage it but no one asks how many times you got fu¢ked first.
@verce in the "tny-tinybeans-group" thread is the perfect example, he's riding the wave of success without any of us knowing the journey he had to endure to get to his level of euphoria.
It's all about off-loading
Successful trading is all about
buying a position solely in the hope of being able to off-load it to someone else at a higher price, so lets not try & complicate trading in the hope of making ourselves look like a trading genius. Pure & simple, good traders are calculated risk takers.
Risk
Risk is a fine balancing act of been stopped out early only to see the price recover 'or' watching the price keep falling and stopping you out at a much larger loss. Knowing when to sell also involves profit taking and not just accepting losses. Risk management is crucial when it comes to trading successfully as posted many times by
@peter2 in his "p2-asx-weekly-portfolio" thread. The last post on his thread is about 'Trade Management' & it's a recommended read.
It's complicated
First off, when it comes to risk you first need to find
your level as risk varies between traders. Risk plays an important part in my Backtesting procedure & when it comes to risk management it's important to 'Dance to the music being played', or it's simply a matter of 'Horses for courses' take your pick.
Parameters
The graphic below displays some of the parameters I use to evaluate various risks using a variety of position sizing methods. The Exportation procedure is more intense than backtesting as the variables & parameters increase.
if I backtest the system, I have real life gain of $2017 vs backtest $5215
interesting difference, where does it come from?
Backtesting & Monet Carlo runs
To me, backtesting gives a base comparison at best, a comparison between strategies or within a strategy. Backtesting & real live trading 'in my opinion' will never truly align as there is so many variables. Backtesting on historical data means JACK, 'out-of-sample' data is the only true measure of value, meaning paper trading is the only real measure of a systems worth.
Its not a level playing field
There is no way any of us sitting at home with limited information, slow internet service using off the shelf trading software can find better investments than the professional trader or the multi nationals that spends millions of dollars on research having easy access to company management. These companies employs teams of people who have the sharpest, fastest & sometimes the most unethical minds in the world - that's who you are trading against.
It's worth remembering
You're up against traders who will have more experience, more information & much more money than you so leave all your dreams of making quick and easy money, behind & concentrate on your survival. Your absolute first goal is to learn how to stay in the game & as with boxing you need to keep on your feet at all times, that's your one job.
The truth is, you need money to make money
Forget about taking a $1,000 account and turn it into millions. That is achieved through gambling, not trading. Instead, you should look to make an average of 25% per year & to achieve this it all depends on your risk appetite and trading style.
What 25% returns will buy
On a $20,000 account, you're looking at an average of $5,000 per year. (Xmas presents for the family)
On a $100,000 account, you're looking at an average of $25,000 per year. (this will Buy me one extra position)
On a $300,000 account, you're looking at an average of $75k per year. (this will meet the 'CAM Strategy' Mission Statement)
On a $1m account, you're looking at an average of $250k per year. (a couple of World Cruises)
This is extremely important, but most traders don’t get it, your account size matters.
If you needed evidence to trade the smaller priced stocks which generally show greater price volatility in preference to the larger priced stocks with lower volatility, this and some results recently shown by
@investtrader (in
skates Dump it Here thread) are it.
PositionScore (Ranking your signals)
A good strategy has many key features giving you a fighting chance of survival, longevity as a trader is your number one job. 'PositionScore' is an important ingredient &
@investtrader made a great post in relation to 'positionscore' for the benefit of others. I'm sure he knew I was aware of this.
@investtrader posted in the hope of helping others, the very essence of the 'Dump it here' thread.
Skate.