Hi jahan
Thanks for explanation.
I could not follow your above point.
What I understood is
Both the PMS people followed position sizing very religiously but they had No RiskControl definitions/MECHANISMS in place-so they continued in increasing loss scenario just like any other stupid investor-hoping that market would eventually recover over time-but they never knew that mkt may need couple of years to complete that recovery.
To me only thing that is of superior importance is as market starts crashing,
Limit of risk and controlling risk in the limit defined well in advance is the only thing that matters,of course as loss begins a shrewd investor may cut position size to pull down the quantum of total loss amount.
I still wonder how in a crashing market by increasing capital can anybody benefit except at the fag end of crash or after reversal began making higher highs.
POSITION SIZE has to be increased in a profitable scenario and is to be reduced in a loosing scenario
regards
ford
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Thanks for explanation.
HTML:
In case of Religare and Sharekhan..., they did a severe mistake, when they don't know the system distribution(probability of losses),......
they need to increase the Capital Rather than just increasing position size/risk.
What I understood is
Both the PMS people followed position sizing very religiously but they had No RiskControl definitions/MECHANISMS in place-so they continued in increasing loss scenario just like any other stupid investor-hoping that market would eventually recover over time-but they never knew that mkt may need couple of years to complete that recovery.
To me only thing that is of superior importance is as market starts crashing,
Limit of risk and controlling risk in the limit defined well in advance is the only thing that matters,of course as loss begins a shrewd investor may cut position size to pull down the quantum of total loss amount.
I still wonder how in a crashing market by increasing capital can anybody benefit except at the fag end of crash or after reversal began making higher highs.
POSITION SIZE has to be increased in a profitable scenario and is to be reduced in a loosing scenario
regards
ford
Quote
[/B]
First u need to know that.....there is no perfect method for Determining Coming Trend....
How do u know that Market will Start to crashing(it may be its a slight pull back)...so that u will reduce ur risk(anybody who says/talks like this he is not a Trader/ either he is Gambler/Academic Trader/insider Trader...)
let Assume that u know in Advance that Market is going to Crash....i don't no the reason ,why we have to reduce the risk,instead of going Short side of the Market(if up tick rule stops u for Short side in stocks, u can do it with same risk in futures).
Again.... how do u know that this is a profitable Scenario and this a loosing scenario...before entering so that we reduce the risk.i bet u don't know it, until u close the Trade.
See iam not here to Prove u wrong....iam just pointing out Real Trading Problems in real world.
in my opinion..Things we don't know/sure 100% about in Trading.
1)Coming Trend
2)The result of the Trade before entry(whether it will be profitable/loss).
3)how much time it will take before a breakout happens.
we need to Act on Present Situation,rather guessing coming events before they occur.
Regards,