Been doing simulations for number of positions and it seems to me with a smaller portfolio for starting out 3 positions works well I have tried it over short periods and long periods and can’t seem to fault it thoughts please
Hi Ralph,
It’s great to hear that you’ve been busy running lots of simulations…which is the homework I mentioned in the last few webinars…Well done.
The Simulator is a great tool for helping members understand how an Edge comes to be. How it requires a suitably large sample size of trades over a range of very different market conditions.
Typically as you reduce the number of positions taken in a portfolio, the greater the volatility of the returns…both positive and negative.
You can test this yourself and see that a smaller number of positions can produce higher returns, but this is often associated with higher drawdowns.
Handling higher drawdown in a calm and rational manner is a trading skill…and this is the key objective of the LTTP program.
The ability to remain consistent in execution (process) and mindset (trading identity) are the key drivers of longer term outcomes.
The work has to be done in creating that new identity in the first instance. (James Clear)
Once that is achieved…we then need to continually monitor our own susceptibility for any “deviations” in terms of consistency. (Mark Douglas 7 principles)
Being part of a group that is trading the same portfolio, holds you accountable to the process and to your growing identity…you need to feed it.
You’re feeding it Ralph, by engaging in the learning resources. Growing new neural pathways comes from deliberate practice with real money at stake (pressure)… at a controlled level.
The simulator is a very useful tool, but you can’t beat real live trading experience for learning to trade properly.
Keep up the great work. 