Posts Tagged ‘poker players’

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.>>

 


Tags: , , , , ,




 
 
 

Zero Hedge

Starwood REIT CEO: "The Manhattan High-End Condo Market Is A Catastrophe"

Courtesy of ZeroHedge. View original post here.

Not all is well in the luxury segment of the US housing market, manifested best through Manhattan's luxury condo segment, where as reported here over the last few months, there has been a sharp deterioration. A quick sampling of recent stories on the topic reveals that the situation is indeed bad, and getting worse:



more from Tyler

ValueWalk

The Cost Of Screwing This Up The Border Adjustment Tax Unimaginable

By Mauldin Economics. Originally published at ValueWalk.

I believe that truly free trade helps everyone. But that’s not what recent so-called free trade deals have given us.

Instead, they delivered something quite different from the kind of free trade that Adam Smith and David Ricardo envisioned.

Globalization Perks Are Distributed Unevenly

AmberAvalona / Pixabay

I explained this at length last July in the “The Trouble with Trade” issue of my free investment newsletter, Thoughts from the Frontline (...



more from ValueWalk

Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil sold out of tanker storage in Asia as market slowly tightens (Reuters)

Traders are selling oil held in tankers anchored off Malaysia, Singapore and Indonesia in a sign that the production cut led by OPEC is starting to have the desired effect of drawing down bloated inventories.

Saudi Arabia's Oil Wealth Is About to Get a Reality Check (Bloomberg)

Saudi Arabia has said oil giant Saudi Aramco is worth more than $2 trillion, enough to consume Apple Inc. twice, and still have room for Google parent Alphabet Inc.

The kingdom may have to...



more from Ilene

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Dollar Falls With Stocks Amid Dovish Fed Minutes: Markets Wrap (Bloomberg)

The dollar fell while Treasuries advanced after minutes from the Federal Reserve’s latest meeting showed officials confident they can raise rates gradually amid little threat that near-term inflation will accelerate.

U.S. Solar Surged 95% to Become Largest Source of New Energy (Bloomberg)

Solar developers installed a record 14.6 gigawatts in the U.S. last year, almost double the total from 2015 and enough to make photovoltaic panels the largest...



more from Paul

Kimble Charting Solutions

Gold & Silver; Knocking on breakout door again!

Courtesy of Chris Kimble.

Silver and Gold have continued to head lower since highs reached back in 2011. Is the 6-year bear market nearing an end?

Below looks at the Silver/Gold ratio over the past decade. To be long and strong Silver and Gold, the preference would be for this ratio to be heading higher.

CLICK ON CHART TO ENLARGE

The ratio has formed a clean falling channel (series of lower highs and lower lows) inside of (1). Three different times it knocked on the underside of falling...



more from Kimble C.S.

Members' Corner

People With Cats Will Understand?

Courtesy of Nattering Naybob.

Taking a "potty break" from "in the Toilet Thursday" or "Thursday's in the Loo".

This week's subject is self evident, starring two lovable felines Cole and Marmalade in, People With Cat's Will Understand.

...

more from Our Members

Chart School

Market Pause

Courtesy of Declan.

Nothing really to add to yesterday. Markets took minor hits, but there was little intraday spread. The biggest spread was in the Russell 2000 which was underperforming heading into today's session. It reversed most of yesterday's gains, but it has some way to go before it begins challenging the breakout


The New Lows and Highs is in a secular bullish pattern, and it will take continued pressure in spike lows to generate a sustained sell off - none of which is happening here.

...

more from Chart School

Digital Currencies

It's Time To Beat Up On Credit Suisse and Their Woefully Misinformed Bitcoin Advice

Courtesy of Reggie Middleton at Zero Hedge

Credit Suisse has been posting cryptocurrency advisories over the last few weeks. They are quite one-sided, although couched in the appearance of objectivity. To explain why it's couched in the appearance of objectivity, and not actually objective, let me give you some background. 

The Obama administration enacted a law known as the Fiduciary Rule, as per Investopedia

The Department of Labor’s definition of a fiduciary demands that advisors act in the best interests of their clients, and to put their clients' interests above their own. It leaves no room for advisors to conce...



more from Bitcoin

OpTrader

Swing trading portfolio - week of February 20th, 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 ...



more from OpTrader

Mapping The Market

NSA May Be Withholding Intel from President Trump

By Jean Luc

These GOP guys were so worried about Hillary's email server and now we find out that we had something close to a Russian mole in the White House. In the meantime, Trump keeps on using his unsecured phone, had high level conversation in his resort in front of dinner guests! It's getting so bad that rumors are now circulating that the NSA is not sharing information with the WH:

NSA May Be Withholding Intel from President Trump

By 

….Our spies have had enough of these shady Russian connections—and they are starting to push back….In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence fro...



more from M.T.M.

Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



more from Promotions

Biotech

The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

more from Biotech

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...

more from David



FeedTheBull - Top Stock market and Finance Sites



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...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>