Discussions about Money Management and Risk Control.
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Post by LongShot » Sat Aug 26, 2006 11:02 am

Thanks for the reply Turtle40. It´s always good to listen from more experienced people. :D

Best of luck for you and your trading.


Interesting that you mentioned this part of Trout´s interview. I just re-read it some days ago. Have you tried coding and testing this concept?

It sounds good, but notice that Trout used mostly short term strategies. I don´t mean to dispute his experience (he is a market wizard after all!), but I don´t know if these rules can be successfully integrated in a pure trend following system, which can experience these broad swings very often. I mean, if you shutdown in the middle of a drawdown, you might end up closing the exact trade that pulls you out of it. This sounds pretty dangerous to me.

Just my two cents anyway. :)

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Post by BARLI » Sat Aug 26, 2006 3:38 pm

Currently my trading is short term too. What I most loved about his money management is that it really helps preventing you from such disasters as October 19-th 1987, remember he lost 9.5 millions in 10 seconds on that day when S&P went down on 1/09/1991, his drawdown on all of his equity was 4%, he got out gradually without pushing the market against him ( since he was Long) too much. As you notice from the chart and Trout himself said that if they'd hold a bit longer they'd be better off getting out with the profit, but again what if it'd be black Monday?


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Post by RedRock » Sat Aug 26, 2006 5:56 pm

Turtle40 wrote:RedRock,

It is much easier to cope with accumulated profits disappearing than losing capital from the start. That is why I have made some discretionary reductions.

It's never easy. At least not for me. That's why the topic of self discipline and super human fortitude comes up again and again.

A comment re Larry Willims and the much published 1000000 profit. Supposedly at one point he was up 2 or 3 M. I forget which. His wife supposedly suggested he call that book, How I lost 2m trading commodities instead.



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Post by Turtle40 » Sun Aug 27, 2006 5:21 am

It's never easy. At least not for me. That's why the topic of self discipline and super human fortitude comes up again and again.
Well said!


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Post by gunter » Sat Sep 02, 2006 2:43 am

Hi guys

Accummulated profits tend to be part of all systems and giving back some of those profits tend to lead to the most profitable systems. In my experience it never becomes easier, but you do get used to it (somewhat). It probably depends on your individual expectations. Higher returns usually equal higher drawdowns (in my experience at least).


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