Let me tell you how I see it. Imagine a trader who makes 5% on an average per trade. With such a (generous) edge, the amount of money he makes depends on a) the amount he has to begin with, and b) how often he can turn around his capital.
If this person makes 20 trades a year, the return will be (the ever elusive) 100%. But, if he commits only 10% of the capital per trade, the return will be 10%. So, it would appear that as long as that person does have a consistent edge, the math is on the side of being "all in" - every time. A player may feel this, and have a need to be forceful about it.
But - This is not for everyone... there are as many psychologies and styles as there are people.
Same is true about other methods, not just EW. Trend following, or various overbought - oversold methods (which are, essentially, related to "reversion to the mean") will work in the majority of cases, but once in a while will issue their best signals for buying right when it's time to run for your life.
Great subject... we should talk more about this. Personally, I realize that there can never be any certainty when it comes to markets - it would threaten their very survival. |
