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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (39590)	10/29/1999 9:34:00 AM
From: Tom Trader	Read Replies (5) \| Respond to of 44573

Gersh -- as one of the people who did send you a pm asking you whether you had changed your methodology causing things to go downhill, let me offer you one suggestion that should be incorporated into your test of any system -- or real time trading for that matter. One has to build in some formalized approach in terms of money management. As your equity changes, the number of contracts that you trade must change -- and trading the maximum number of contracts while it may bring about spectacular returns when all goes well will assuredly result in catastrophe when things go badly. I am speaking from personal experience. In 1985 or thereabouts, when I first started trading futures seriously, I managed to grow a $30K account to $185K in about 6 weeks or so. I had all these fantasies that with that type of success it should not take me long to get to $1 million. Well, four weeks later my equity was down to $40K. I then became a believer in money management -- and have been ever since. I was telling someone in a pm some time back that the gunslinging approach works some of the time but in the long run it blows up. I posted once before that I am totally amazed at the size of positions that some contestants have taken during this contest -- and feel like I am playing at a black-jack table where while several contestants are using $500 chips, I am sitting there pushing out $5 chips. Admittedly, part of my caution is that I am testing out a couple of other systems that have proven promising in simulations -- but even leaving that aside, I could never see myself being as aggressive as some of the other contestants. Perhaps it this sense of caution -- born in part by experience -- that has enabled me to last in the futures game for the best part of 15 years. BTW, there has hardly been a year when I have not made money -- but by the same token there has hardly been a year that I have achieved spectacular returns. I would view a consistent 100% to 150% return over a year as being excellent -- and if I could do that consistently I'd be well pleased -- I am not able to do anything close to that at this time, at least on a consistent basis. To achieve a return of much more than that on a consistent basis would be very difficult, IMO. In fact, one of my reasons in pursuing day trading futures is to see if I can enhance my position trading returns with some effective day trading. I would be curious to hear what sort of returns other experienced futures traders have been able to generate on a fairly consistent basis. Most traders spend an endless amount of time developing optimal entry signals, rather less time on exit strategies and barely any emphasis is given to money management. Although this post is addressed to you, the comments represent some general thoughts and are not directed to specifically, other than perhaps the first two paragraphs. My regards -- and I shall watch with interest as you continue to develop your system