Posts Tagged ‘Brett Steenbarger’

How to Avoid Risk of Ruin in Trading

Here’s a few excerpts from an eye-opening article on the risk of ruin by Brett Steenbarger:

How to Avoid Risk of Ruin in Trading

Three businessmen playing poker outdoors and close-up

Here’s a nice calculator of risk of ruin for poker players that easily adapts to trading. Risk of ruin represents the odds of losing all of your gambling (or trading) stake…

To adapt the calculator for our needs, instead of estimating win rate and and standard deviation per hour, we will make those daily estimates. So the win rate would represent average profit per day, and the standard deviation would represent a measure of the variability of daily returns.

Let’s say that your account total (bankroll) is $100,000. You are willing to risk 2% of your money in a single day, and 2/3 of your days will fall between losing and making 1% on your capital. You have a modest positive edge that will earn you 10% on your money in a year, which would be $40 per day on average ($40 x 250 trading days = $10,000).

Your risk of ruin in that situation--the risk of losing all your capital--is only .03%….

The lesson to be learned is that risk of ruin jumps astronomically when one’s edge is eroded and when one’s variability of returns expand. This is why it’s imperative for serious traders to cut their risk (reduce the variability of returns) when they sense that they’ve lost their feel for markets. It’s also why it’s imperative for serious traders to risk manage their day to day trading, so that they cap their daily P/L swings relative to the edge they possess.

And the frustrated trader who overtrades when he loses his edge? Risk of ruin, the calculator tells us, jumps to 100%.

Full article here.>>

 


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Phil's Favorites

CLICK LINK IN CASE OF EMERGENCY

Let's hope we're not tempting fate, but here are some really bad calls from 2013 - 2015.

CLICK LINK IN CASE OF EMERGENCY

Courtesy of 

When does the bull market end?

It ends when it ends.

No one can reliably tell you in advance. There aren’t any formulas. There’s not enough data to calculate it. The machine is biology, not physics. The relationship between sentiment and fundamentals is too complex – even if you know what the data will be a year from now, five years from now, you cannot possibly know how a billion investors around the world will be react...



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Zero Hedge

Goldman Expects Trump To Withdraw From NAFTA, Congress Readies For A Fight

Courtesy of ZeroHedge. View original post here.

With NAFTA negotiations going badly, Goldman Sachs has published a report, “Thoughts on the Potential US Withdrawal from NAFTA,” that concludes that the US is likely to withdraw from the trade agreement next year “At this point, efforts at revising the agreement look likely to be unsuccessful, though a deal is still possible, in our view. If the talks do not result in a revised agreement by early 2018, we believe that the Trump Administration could announce its intent to withdraw from NAFTA.” The NAFTA agreement calls for a six-month notice per...



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ValueWalk

Full Transcript Of Donald Trump Interview With Maria Bartiromo [PREVIEW]

By VWArticles. Originally published at ValueWalk.

Please see below for the full transcript of FOX Business Network’s Maria Bartiromo. The interview with President Donald Trump today that will be airing across FOX Business Network’s (FBN) Mornings with Maria (6-9AM/ET) and FOX News Channel’s (FNC) Sunday Morning Futures 10AM/ET).

]]> Know more about Russia than your friends:

Get our free ebook on how the Soviet Union became Putin's Russia.

When:

Part 1 - Sunday, October 22nd  on FOX News Channel’s Sunday Morning Futures (10-11AM/ET)

Part 2 - Monday, October 23rd on FOX Business Network’s Mornings with Maria (6-9AM/ET)

...



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Insider Scoop

There Could Be 109% Upside In uniQure As Company Advances Gene Therapy Into Clinical Trials

Courtesy of Benzinga.

Related QURE 32 Stocks Moving In Friday's Mid-Day Session Wall Street's M&A Chatter From October 19: Uniqure, Ulta, Sally Beauty,...

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Chart School

All Day Recovery

Courtesy of Declan.

It had looked bleak for markets at the open following a big gap down. However, this was just a temporary hit as markets came back right from the open.  It's also good news for bulls or long holders. The S&P shows this best.


The Dow Jones actually went as far as to test former upper channel resistance, now turned support.  Volume climbed in accumulation.

...

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Digital Currencies

The World's Largest ICO Is Imploding After Just 3 Months

Courtesy of Zero Hedge

Earlier this summer, Tezos smashed existing sales records in the white-hot IPO market after the company’s pitch to build a better blockchain for cryptocurrencies made it one of the buzziest ICOs in the world. As we noted at the time, the company capitalized on that buzz by courting VC firms and other institutional investors with a $50 million token pre-sale. After the company opened up selling to the broader public, demand soared as investors greedily bought up tokens in spite of glitches that threatened to derail the sale early on. By the end of its weeks-long token sale in July, Tezos had sold more than $230 million.

Now, Tezos is proving that authorities in the US and China were on to something when they decided to crack down on the ICO market, which has become a cesspool of...



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Mapping The Market

Puts things in perspective

Courtesy of Jean-Luc

Puts things in perspective:

The circles don't look to be to scale much!

...

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Biotech

Circadian rhythm Nobel: what they discovered and why it matters

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

Circadian rhythm Nobel: what they discovered and why it matters

Courtesy of Sally Ferguson, CQUniversity Australia

Today, the “beautiful mechanism” of the body clock, and the group of cells in our brain where it all happens, have shot to prominence. The 2017 Nobel Prize in Physiology or Medicine has been awarded to Jeffrey C. Hall, Michael Rosbash and Michael W. Young for their work on describing the molecular cogs and wheels inside our biological clock.

In the 18th century an astronomer by the name of Jean Jacques d'Ortuous de Ma...



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Members' Corner

Day of Last Dances

News today has been relentlessly terrible. A horrific mass murder happened last night in Las Vegas. (Our politician's abject failure to address gun control is beyond sickening.) And today, reports that Tom Petty died of a heart attack, followed by reports that Tom Petty is not dead, and now reports confirming that Tom Petty has passed away. 

...

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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

[For more information on NewsWare, click here. For a list of prices: NewsWar...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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