Mar
26
Most Unpleasant Possible Line, from Nigel Davies
March 26, 2008 |
For a chessplayer it's part of the job to consider that the opponent will try to test you with the most unpleasant possible line of play. But I suspect there's a problem here for countists in that the main thrust of the thinking is in what happens in a 'typical' case.
Nevertheless we have to consider what the plan is when the market does exactly what you fear the most. Is there a plan?
Perhaps the most pernicious scenario is the margin call that acts effectively as a stop loss. Let's call them margin stops. If considered during tests, margin stops would render a lot of the systems useless in the first place. Might as well be betting on the ponies.
Bruno Ombreux asks:
Isn't it easier to aim for 10% a year, which is achievable with far less risk, and far less work? I mean, at 10% a year for 20 years, one would probably rank high among the top 1% of market participants. And it is incredible what 10% a year can achieve compounded over 20 years if one keep living expenses reasonable in the meantime.
What matters is the end game, isn't it?
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