Safe way to use leverage

[stink]

Understood mate i have a great deal of material to get through at home from the course i attended awhile back, just nothing on leveraged instruments in there.

Have you read Catherine Daveys book? I might grab that to if its available.

Thanks Stink

 

[swingstar]

Understood mate i have a great deal of material to get through at home from the course i attended awhile back, just nothing on leveraged instruments in there.

Have you read Catherine Daveys book? I might grab that to if its available.

Thanks Stink

Yep, I've read both her books. They're both basically plugs for CMC Markets. I don't recommend them. You can find all the info you need online. If you have questions, your CFD provider should be able to answer them - they're not complex.

It's also obvious she doesn't have a tested system after reading her trading diary. No wonder she is always so stressed, lol (she goes to a psych after a streak of losing trades).

 

[stink]

Yeah i read the first chapter online last night and she plugged CMC straight up lol had a link to their demo and all

Anyway yeah i will hit up my provider for some details on cfd's

Thanks Again
Stink

 

[tech/a]

Always remember you neednt trade CFD's to their maximum leverage---IE 10 X.

Radges use of leverage in his book is not as expected and excellent.

Stink relax---if you were a little more specific then perhaps you would not have been misunderstood.
My apologies for kicking up a stink!

 

[Ageo]

If using a percentage of your current balance, not your initial starting capital...

$10k - 10% = $9k
$9k - 10% - = $8.1k
$8.1k - 10% = $7290
etc.

Thanks for the explaination.

Although risking more than 2% on your "current balance" is way more than enough.

 

[Ageo]

Tech, 1 question are you subscribed to "The Chartist"?

 

[stink]

Always remember you neednt trade CFD's to their maximum leverage---IE 10 X.

Radges use of leverage in his book is not as expected and excellent.

Stink relax---if you were a little more specific then perhaps you would not have been misunderstood.
My apologies for kicking up a stink!

Sorry mate,

Yeah i suppose i get a bit frustrated because its hard to know how to ask the right questions to get the answer i want

Think i have got what i am after for now, i shall take the advice and move forward stopping via the bookshop on the way home of course.

Thanks Stink

 

[tech/a]

Tech, 1 question are you subscribed to "The Chartist"?

No,but I have thought about it for no other reason but to study how Radge thinks. I like the way he thinks.

 

[swingstar]

Yeah i read the first chapter online last night and she plugged CMC straight up lol had a link to their demo and all

Anyway yeah i will hit up my provider for some details on cfd's

Thanks Again
Stink

Her diary is quite interesting actually. If you do want a book purely on CFDs, then I'd recommend that and not her other one. She does give a brief explanation on them in the beginning.

In the first few weeks or so she loses 40%, then goes on to make 400% (of her lowest point) in like two months. She does have a lot of years experience, but it didn't appear that she was following any rules or routine, and given that she was so emotionally affected by her initial drawdown, it appears she had no idea of expectancy (of her 'system' or past results at least, as she does explain expectancy).

She's also a bit sloppy on risk... risking a fixed $350 on trades, then just piling in on winners.

Should get something from it, if not what NOT to do (if you want stress-free trading).

 

[Ageo]

No,but I have thought about it for no other reason but to study how Radge thinks. I like the way he thinks.

thanks mate, looks like ill need to purchase his book on adaptive analysis.

 

[tech/a]

thanks mate, looks like ill need to purchase his book on adaptive analysis.

Better still BOTH.

You could do worse!!

 

[tech/a]

Now that I have a little more time I must stress and make the point clear that to trade any trading method successfully you should have the following information about the methodology you trade.
If you trade without it you really are trading blindly,your taking a risk both in possibly being more cautious than you need be,
IE Bailing out of a method that may well be profitable in the long run OR
Being to liberal and running the risk of believing that your method is profitable when in fact it simply isnt.

You need Initial Drawdown.You'll need more than one test to be able to determine this.Best way is Montecarlo which you can test you methodology in a few minutes over 1000s of Portfolios traded at various starting points.
This will give you a deviation with which to benchmark results.

Youll need maximum string of losses.Without this tested over 1000s of portfolios you wont be able to determine wether a run of losses is acceptable (Read expected) or is over anything ever recorded in your rigorous testing.

Both of these are most important when setting your risk when trading wether it be leveraged or not.

Once you start to run a profit its far easier to manage and the stress or fear and as profits increase these deminish to a point where it doesnt play a part.Infact trading becomes boring.

There are many other components which need to be satisfied in a successful trading methodology (Positive expectancy being the main one) but as for gearing and setting risk parameters for Margin or any other leveraged trading you absolutley must have this information.
Without it your punting.Sure some punters do very well.
Ive always been a very average punter.

 

[stink]

Now that I have a little more time I must stress and make the point clear that to trade any trading method successfully you should have the following information about the methodology you trade.
If you trade without it you really are trading blindly,your taking a risk both in possibly being more cautious than you need be,
IE Bailing out of a method that may well be profitable in the long run OR
Being to liberal and running the risk of believing that your method is profitable when in fact it simply isnt.

You need Initial Drawdown.You'll need more than one test to be able to determine this.Best way is Montecarlo which you can test you methodology in a few minutes over 1000s of Portfolios traded at various starting points.
This will give you a deviation with which to benchmark results.

Youll need maximum string of losses.Without this tested over 1000s of portfolios you wont be able to determine wether a run of losses is acceptable (Read expected) or is over anything ever recorded in your rigorous testing.

Both of these are most important when setting your risk when trading wether it be leveraged or not.

Once you start to run a profit its far easier to manage and the stress or fear and as profits increase these deminish to a point where it doesnt play a part.Infact trading becomes boring.

There are many other components which need to be satisfied in a successful trading methodology (Positive expectancy being the main one) but as for gearing and setting risk parameters for Margin or any other leveraged trading you absolutley must have this information.
Without it your punting.Sure some punters do very well.
Ive always been a very average punter.

HI Tech,

Thanks again for an informative post!

Now i assume the only way to get this type of testing done is through some software package? Or is there any free tools available that can perform this Montecarlo test, right or wrong i forked out alot of money for my trading platform which is very good but it doesnt have this test available.

Any suggestions ?

Cheers Stink

P.S bloody local bookstore didnt have any copies of Nicks book

 

[tech/a]

Email Nick direct Im sure you can buy a copy from him.
Could also try Moneybags they are on the net.They are in Adelaide but will deliver everywhere good to deal with.

Yes this type of analysis is difficult to find "built in"
Tradesim has it so to does Bullcharts as it uses tradesim
I believe that Amibroker has an addon.

However if you have a Systems tester that can test Portfolio's then the only suggestion that could be of some benifit is that of Kaves in a post above.
Problem is that even spending many hrs testing on various dates will only give you a rough guide to deviation.

If however you find one solitary losing portfolio my advice would be back to the drawing board.

 

[It's Snake Pliskin]

Now that I have a little more time I must stress and make the point clear that to trade any trading method successfully you should have the following information about the methodology you trade.
If you trade without it you really are trading blindly,your taking a risk both in possibly being more cautious than you need be,
IE Bailing out of a method that may well be profitable in the long run OR
Being to liberal and running the risk of believing that your method is profitable when in fact it simply isnt.

You need Initial Drawdown.You'll need more than one test to be able to determine this.Best way is Montecarlo which you can test you methodology in a few minutes over 1000s of Portfolios traded at various starting points.
This will give you a deviation with which to benchmark results.

Youll need maximum string of losses.Without this tested over 1000s of portfolios you wont be able to determine wether a run of losses is acceptable (Read expected) or is over anything ever recorded in your rigorous testing.

Both of these are most important when setting your risk when trading wether it be leveraged or not.

Once you start to run a profit its far easier to manage and the stress or fear and as profits increase these deminish to a point where it doesnt play a part.Infact trading becomes boring.

There are many other components which need to be satisfied in a successful trading methodology (Positive expectancy being the main one) but as for gearing and setting risk parameters for Margin or any other leveraged trading you absolutley must have this information.
Without it your punting.Sure some punters do very well.
Ive always been a very average punter.

Tech,

Good advice there!

Is there any for the discretionary gang?

 

[stink]

LOL bloody hell,

Snake you just made me ask myself a question.

What type of trader am i trying to be? Tech give advice based on the notion that you use a purely mechanical system, which is great but does it apply to me? hmmm

I think i am a discretionary trader so far, i mean i study the charts and use my own judgement but also wait for indicators etc

I dont think i could even test my method if i had a peice of software that could do it.

Anyway cheers
Stink

 

[tech/a]

LOL bloody hell,

Snake you just made me ask myself a question.

What type of trader am i trying to be? Tech give advice based on the notion that you use a purely mechanical system, which is great but does it apply to me? hmmm

I think i am a discretionary trader so far, i mean i study the charts and use my own judgement but also wait for indicators etc

I dont think i could even test my method if i had a peice of software that could do it.

Anyway cheers
Stink

And there in lies the problem for discretionary traders.
Trading in a discretionary manner is simply hit and miss.
You just dont have the information to be able to trade with confidence.
I and many like me were purely discretionary traders. However when I decided to trade serious money ( $100K plus on Margin),there just wasnt the CONSISTANCY I wanted.So I and many like me have gone the Mechanical track. The results and the piece of mind have been well worth the long journey.

Sure I still trade in a discretionary manner and sure I have good results but they are without consistancy---and I trade only smaller sums.
Being business orientated I know the value of Consistant COMPOUNDING gains

So really if like me and others like me who are not happy with your consistancy and wish to trade in telephone numbers(but consistancy and reliability are placing doubts in your mind) then this in my veiw is the ONLY way to go.

In the end you have a business not an INTEREST.

 

[Ageo]

Tech, with a mechanical system once programmed do you do any physical work (like buying/selling? or anything else) or does it do it all for you?

 

[stink]

If you trade by a certain set of criteria all the time no matter what, is that a mechanical system? even though you do the physical searching etc you always act on a certain set of criteria?

 

[It's Snake Pliskin]

By tech/a: And there in lies the problem for discretionary traders.
Trading in a discretionary manner is simply hit and miss.

That is true. But, what about the controlled miss and hit? I`m not talking about controlling the market, but oneself. A lot can`t do it, or don`t know how to do it.

You just dont have the information to be able to trade with confidence.

There are no numbers to work with; maybe paper trading info but they are not numbers, just results - not to be trusted fully.

I and many like me were purely discretionary traders. However when I decided to trade serious money ( $100K plus on Margin),there just wasnt the CONSISTANCY I wanted. So I and many like me have gone the Mechanical track. The results and the piece of mind have been well worth the long journey.

It helps if one has weak psychological biases to deal with.

Sure I still trade in a discretionary manner and sure I have good results but they are without consistancy---and I trade only smaller sums.
Being business orientated I know the value of Consistant COMPOUNDING gains

Compounding is very important to wealth creation.

So really if like me and others like me who are not happy with your consistancy and wish to trade in telephone numbers(but consistancy and reliability are placing doubts in your mind) then this in my veiw is the ONLY way to go.

I agree.

Discretionary traders have convictions and price discipline - they know their system, what drives the market and their psychology. They are happy to hit and miss.