Losing Streaks - How Professionals Deal With Them

[wearthefoxhat]

Thanks for the info.

Like the analogy with poker. Playing Aces/Premium Holdings.

Aces aren't much to get excited about, it's just a pair and they only win as little as 31% of the time (admittedly 85% vs one random hand). Poker teaches you that nothing is a premium holding until the action starts.

Pocket Aces are like pocket Jacks, there's 3 ways to play them, and they're all wrong.

You can either win a small pot or lose a big one too.

[lmf21734]

At least we both agree that the content of the article is sound.

Not sure what the authors track record in trading has to do with the article.

For instance when I read an article from a professor of statistics about how probability theorem and random distribution applies in trading its of no relevance to me whether the professor has traded or not traded. What I am interested in is whether the information he is providing is sound and has substance.

Unless I have missed something I don't think the author was talking about his own results. I sensed he was talking generally about how long losing streaks for a working strategy can cause people to jump ship.

Yes you are right its not about just win rate but also the risk to reward so I was making assumptions reading the article that he was talking about strategies which had a positive expectancy which with a possible 10 run losing streak would mean a strategy less than 60% but with a reward that is higher than the risk.

[ruthlessimon]

At least we both agree that the content of the article is sound.

& that is such a big danger. It comes across that he's legitimate; therefore the poor newbie goes & buys his $500 course etc..

Offering advice to traders who are desperately trying to get profitable - by citing advice from traders who aren't profitable.

can you see the contradiction?

I must only push through a losing streak, if I have edge. The automated strategies above are proof of this. The computer (which doesn't have emotions - yet) pushed through & remained at 0 - & will stay at zero to infinity!

It's psychotic to think "my fortune will change" by doing the same old thing day after day. & if I don't notice the lack of edge quickly enough, I'll have bled out a significant portion of my account through the many frictions of trading (software, data, commision).

[lmf21734]

ohhhhh its the bit about buy selling a course..OK then you have point..

Sorry when it comes to websites selling courses I have an immediate mental block where I don't even read that information unless its an industry recognized and proven trainer who provides the proofs etc....I was just focused on the article than any sales pitch that was on the site.

Sorry..I didn't realize that was what you were referring to.

[lmf21734]

Just one final point in regards to an edge.

Do you believe that Monte Carlo simulations are useful in providing some verification of whether a strategy has an edge based on its win rate, reward to risk ratio and sample size. It wasn't clear whether the computer simulations you were referring to were Monte Carlo or something else.

[ruthlessimon]

Something like this is probably worth a separate thread & I'm not the perfect person to answer it - Peter would be far more versed than I am (& certainly wouldn't be a fan of my tests above (i.e. basic backtest in excel)). But this type of quantitative knowledge (knowledge that isn't so prevalent) - imo, provides a trader with a solid foundation, which then gives the "not ditching a strategy after 10 losses" a real use.