The role of psychology in auto-trading - page 8
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On the one hand, from a purely mathematical point of view, the increase/decrease of the same number of points results in percentually different values in the pocket.
And on the historical side, according to the definition of "long" - buy and hold ... Faith, hope, and love, in long-term economic growth.
But is it borne out by reality? Who knows yes, who does not know probably not ))))
I mean longs of gold, euras since 2000 ))))
On the one hand, from a purely mathematical point of view, the increase/decrease of the same number of points results in percentually different values in the pocket.
And on the historical side, according to the definition of "long" - buy and hold ... Faith, hope, and love, in long-term economic growth.
But is it borne out by reality? Who knows yes, who does not know probably not ))))
I mean longs in gold, euras since 2000 ))))
It's not a long for gold, it's a short for the dollar.
There is only one way to deal with the intricacies of personal psychiatry and that is to reduce the size of the losses.
If a person earns $1000 per month (no matter on what, but this is his total monthly income), the loss of, say, $100, will be quite acceptable (this is if the personal budget is in surplus). Further, we know that TC makes 25-30 trades per month. This means we need to risk 3 quid (well, the volume is calculated based on stop level). Then we won't have an itch to close something sooner. So, this $3 is a comfortable level of risk even if the account has $10000 or 0,03%. And this despite the fact that the optimum risk may be 17%.
Even on such a micro volume the TS will start to earn and it will increase the monthly income and will add confidence that will increase the size of the comfortable risk and so on spiral, until you find the optimal risk of the TS at first. Then with the growth of risk requity will begin to grow with the slowdown and at some point the growth of risk will lead to a fall and eventually lead to the drain. This is the standard life cycle of the trader with the TS with positive mathematical expectation.
The concept of personal risk and systemic risk are extremely underestimated in today's realities. A simple example, you have a TS that earns, on a relatively small depo (1-50kue) take 100 leverage and TS will sell capital, and trading on 1% of your capital (0.01 leverage) you will grow old while TS earns for dinner at a decent restaurant.
St.Vitaliy:
,,,,, The notion of personal risk and systemic risk are extremely underestimated in today's realities. A simple example, you have a TS that earns, on a relatively small depo (1-50kue) take 100 leverage and the TS will sell capital, and trading on 1% of your capital (0.01 leverage) you will grow old while the TS earns for dinner at a decent restaurant.
It's called "woe is me!" = General speculation in the kitchen about the causes of possible negatives, without a basic knowledge of the profession and its possibilities...
I do not understand what you mean, St.Vitaliy for small profits on large investments and do not believe in the TS with a positive expected payoff? then where is "the light at the tunnel" in your opinion?
I mean we are humans, not robots. And that's why in an ideal tester (considering 99.9% of market conditions) the system says that the maximum yield of ХХХ% (you can put any figure) can be obtained risking 20% of capital in each trade and max DD will not exceed 10%. In practice a living person who has activated such a robot can eat himself alive seeing the current drawdown of 500 on a 10 000 account, because his mother earns this sum for 3 months.
Often the beginner in real trading has a lower level of personal risk in the day signs than the TS allows. Once he sets the level allowed by the TS, he is drawn to exit the trade earlier when he is in the plus and agonizes when the price reversed immediately after the stop loss occurs. If the result of one trade does not affect his financial situation (this is what he believes and not what he says on the forum), he will not interfere with the TS operation.
The professionals have another problem - they have such a good feel for the market/TC that they take more risk.
Let me explain. For me the term risk is the size of losses in one trade. The percentage of risk that is optimal for a particular system should be strived for, and it is not necessarily 2% that they write about.
.... To me, the term risk is the amount of loss in a single trade. You should strive to risk the percentage that is close to the optimum for your particular system, and it is not necessarily 2%, which is written everywhere.
I measure possible risk in a deal in pips by exposing SL. I use the % risk limit as the total loss of the deposit per day and use it as the basis for my strategy.
How do you calculate Optimal System Risk? I do it by sampling, analyzing loss size, time in trade, period of trade, other factors. /Unfortunately not all strategies can be tested in the Strategy Tester.
St.Vitaliy:
....But, unfortunately not all strategies can be tested in the tester, and the programmer himself can eat himself alive seeing a current drawdown of 500 on 10000 account, since his mum has been earning this sum for 3 months.
For some people it is easier to part with $100 than with $1000. But when you "may", even 1000$ loss in a transaction does not make you feel uncomfortable, what can not be said about 3000-5K for example etc. everything is individual and gradual. psychologically trading should be comfortable.
How do I calculate the Optimal Risk for the system? I only use sampling, analysing loss size, time in a trade, period of trade, other factors. /Unfortunately, not all strategies can be tested in the Strategy Tester.
There is a book called Spertrader. The author of it for 300 pages is repeating one simple idea. "Calculate profit/loss in relative units" - he suggests the stops.
So if the risk is equal to 1% of capital, then the TC result is a raid of numbers from -1 to infinity, but really more than 10 is extremely rare.
Then lementarno take the average value of the series, the author says that with TC more than 0.4 you can work, and more than 0.7 = grail.
Then just vary the risk [0.5%, 1%, 1.5%, ... , 100%] and see where your maximum return is. It is also a good idea to measure your DD.
Graphically, the maximums of equity will describe an inverted parabola. I have a system with maximum 72%. But the DD will look like a hyperbola.
If they are combined on the same graph, the area where the yield graph is higher than the MA graph and to its extremum, will be a reasonable level of risk. It is better to understand from the graph