No 3R's, No Problem

...cont'd from yesterday...

Here’s some ideas for working around the problem described in yesterday’s blog article.

1. Repeat the same Level (“Day”) until you have accumulated the 3R profits and then use the same formula for calculating how much to increase today’s risk. This allows the model to work, albeit at a slower pace. The annual return will be lower, but will still be very high.

2. Use “Accumulated Profits To Date” since Day One as a substitute for “Yesterday’s Profits” in the formula for calculating how much to increase today’s risk. This allows the model to work at a slower pace, but does involve risking more of the profits.

3. Any day you lose all of yesterday’s profits (namely 3R), stop trading so that you don’t lose more than 3R. Then the next day, just repleat the same Level (“Day”).

...cont'd tomorrow...

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Copyright 2008 Raymond T. Lee. All rights reserved.
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