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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (84891)	9/10/2008 10:01:03 PM
From: John Pitera	1 Recommendation Read Replies (1) \| Respond to of 116555

speaking of Bjorn, I again want to thank you for those hours we spent with that systems Trading guy . It really seemed to me that he had just about everything he needed in that system yet he would not calculate commodity volatility using a 20 day MA of average daily true range and then use that to create a dollar weighting on the size of a position he would put on using a fixed 2% stop loss level on each position relative to the total capital of the account. And adjusting contract size to fit with the ATR of the prior 20 days. Amazingly he did not want to do that little extra step... thus when crude and Natural Gas volatility was picking up like crazy in that Hurricane ravaged trading environment of Katrina and Rita in 2005, he ended up way over allocated and trading too large of a position in his energy trades a few other markets. Amazingly so many people want to "blow-off" the money management wisdom in the Market Wizard books and a few other books; that are not esoteric or black box by any means. And I'm pretty sure that Larry Hite stated in his interview in the first book, that they just get out and stand aside in markets where the price volatility gets too high on a standard distribution. One further random musing is that I'm really surprised that no one ever seems to reference Stanley Kroll's fantastic book Kroll on Futures Trading Strategy. To me it seems like the most common sensical reasonable treatise ever written on the idea of position trend trading and money management. I guess it fails in the 2 key aspects that Futures books need to have the required appeal of the masses. First, it does not have you trading in and out enough to make good money for the brokers. And You have periods of boring inactivity, where you are not in the market or you are in the market with a trending position that is making you money. And in all truth, that is pretty frustrating and boring to a lot of high octane, active management traders. "I don't care that my system is making me money it's not generating enough in and out activity to make me feel like I'm actively trading the market". That type of thought never seems to cross the minds of people with oil wells and NG wells in texas where you slowly watch them go back and forth all day and all night in robotic fashion. Go figure. John