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Webinar: Private Banker's Perspective on Risk Management Presentation


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Webinar: Private Banker's Perspective on Risk Management Presentation

  #51 (permalink)
 
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 Big Mike 
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I don't think it is quite that easy. If you look at the webinars from Scott at Master The Gap on futures.io (formerly BMT) and the Master Homework thread, I believe the conclusion shows gap plays as you described are not so straightforward.

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  #52 (permalink)
 wwwingman 
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Big Mike View Post
What did everyone think of the webinar?

Mike

I think it was a good and important webinar.

In my trading journey I slowly understand how much we tend to under evaluate very important aspects of trading like risk, money management/position sizing, psychology, under capitalization and often the combination of all of them. Our focus on entries because we want to be right and because it is the easiest thing to sell/buy in this industry make us blind and very often leads to loss.

I liked this webinar because in the trading examples there is much more information than what you may think. If you are a beginner (like me) you should give real attention to how simple the trading system briefly shown looks (which does not mean it is easy to invent, nor to execute). Try to understand how solid the risk management is (3 lot multiples for simplicity, probably sized in relation to the stop distance, 1 and 2 scales for quick reduction of risk BUT with an 1xRisk expectancy, 3rd scale for having positive expectancy, reentries for pushing your edge when premise is valid, etc...).

I liked this webinar because it talked about risk as a way to build a better business, as a way to increase your confidence, as a way to increase your performance, as a way to have a better life. Think about it, most us beginners are probably out of business for 2+weeks if our computer crashes tomorrow. Shouldn’t this risk be addressed? Don’t you think a daily backup will give you the feeling you are more professional, more confidence and better “peace” when you are trading?

I think this webinar should be seen more than once and probably again in few months for most of us beginners.

W.

-- The rest is silence
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  #53 (permalink)
 
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 Private Banker 
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GSREDDY View Post
thanks ben for great clarification.

identifying the day type early is the key. based on the pre market analyses, market open with respect to previous days value, we will have day type expectation.
example: open out of range, expect trend day in the direction of gap or open test drive

based on my observation, if the market trades in the direction of gap for more than 3 points in ES with out filling the gap, then we have very very less chances of filling the gap in that day.

it will be great, if you can explain or give some base point to start analyses to identify day type early in the day based on that days trading session (developing day). at what point of time you will change your initial perception on the market (from trend day to any other type of day or any other day to trend day)

example: based on pre market analyses, expectation is trend day, at that point of time you will start feeling that yes it is trend day.

sorry for lengthy question, looking for some kind of base point to start analyses to identify probable day type as early as possible in the developing day with respect to pre market day type expectation.

OK, sounds good. I'll be covering this very topic in my next webinar here on futures.io (formerly BMT). Great questions though.

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  #54 (permalink)
 
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 Private Banker 
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RichardHK View Post
Hi Ben,

Many thanks for taking your time for the webinar. Most valuable and much appreciated. Look forward to future offerings.

Ref your website setup, note that your non-www domain does not work. ie, The Private Banker does not work (and it should). Most people these days do not bother typing in the www (or should not bother) so you need to fix your site htaccess file to open up this domain.

PS. Mike - thanks for fixing the video replay. Assume you have done something as webinar played from start to finish with no skipping back. Wonderful.

Thanks for reminding me of this. I had it set up initially and it appears to not be taking correctly. I'll look into this further for a resolve. Just so you know, you're talking to a very non-savvy guy here when it comes to this technical stuff, lol! I've always had an IT guy handle this stuff for me.

Cheers,
Ben

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  #55 (permalink)
 
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 treydog999 
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@Private Banker

Using just the original entry / Core position, does the reward risk ratio have any impact on your stop/target settings?

I see you scale out at 1 and 2 pts everytime. The 3rd target is selected from structure. Let me work through your Trade Example 2 (video time 1:14:00) This is because it seems like the simplest example without any adds. I have no idea if my thinking is correct or not.

Your Initial Average Trade Location is 1609.50 with 3 contracts risking 1.75 pts.
Currently your risk is a total of 3*1.75=5.25

1st Scale is hit at 1610.50 = +1pt (on 1 lot / 2 remaining)
1st scale #2 is hit at 1611.50 = +2 (on 1 lot / 1 remaining)
Final Target 1613.25 = +3.75 ( on 1 lot / 0 remaining)

So as a total sum your earning 6.75 pts (each scale out on 1 lots totalled) while risking 5.25 pts ( 1.75 for each contract) this is a reward risk ratio of 1.28:1

Does that matter at all? I mean is that something that should even be considered? I know you mentioned looking at MAE and MFE is not really something people should focus on. Is there a minimum Reward:Risk ratio you have that you won't take trades, say 1:1? I know that having a successful satellite/addons will help you earn more points, but they may or may not increase your reward:risk ratio depending on how they are structured on an individual basis.

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  #56 (permalink)
 
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 Private Banker 
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treydog999 View Post
@Private Banker

Using just the original entry / Core position, does the reward risk ratio have any impact on your stop/target settings?

I see you scale out at 1 and 2 pts everytime. The 3rd target is selected from structure. Let me work through your Trade Example 2 (video time 1:14:00) This is because it seems like the simplest example without any adds. I have no idea if my thinking is correct or not.

Your Initial Average Trade Location is 1609.50 with 3 contracts risking 1.75 pts.
Currently your risk is a total of 3*1.75=5.25

1st Scale is hit at 1610.50 = +1pt (on 1 lot / 2 remaining)
1st scale #2 is hit at 1611.50 = +2 (on 1 lot / 1 remaining)
Final Target 1613.25 = +3.75 ( on 1 lot / 0 remaining)

So as a total sum your earning 6.75 pts (each scale out on 1 lots totalled) while risking 5.25 pts ( 1.75 for each contract) this is a reward risk ratio of 1.28:1

Does that matter at all? I mean is that something that should even be considered? I know you mentioned looking at MAE and MFE is not really something people should focus on. Is there a minimum Reward:Risk ratio you have that you won't take trades, say 1:1? I know that having a successful satellite/addons will help you earn more points, but they may or may not increase your reward:risk ratio depending on how they are structured on an individual basis.

First, I'm trading more than 3 contracts but I break them into 3 "units". These units can consist of whatever amount of contracts I feel is reasonable given the risk on the trade. The scales in this example as I said in the presentation are one point and two points out of simplicity in explaining the scenario. Its up to each individual on where they want their scale outs to be. In this example, we had a very tight range move. I took the scales at 1 point and 2 points to lock in profit in the event the market did not trade up to the final target. Would the trade be more profitable if I held on to the full position all the way to the target? Yes but that's a flawed way of thinking in that you're only focusing on the potential outcome vs. the process of active risk management. What if the market didn't trade up to the target and came right back at you while you're holding a full position?

Anyway, hopefully that makes sense. Larger opportunities may require larger risk which then would require larger scale outs to ensure your position is protected. The exact levels in which one decides to place their scales is up to them. The goal with this is to simply protect your core position in the event the market does not reach your target area and comes back against you and stops you out of your core.

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  #57 (permalink)
 
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 GaryD 
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Private Banker View Post
... I took the scales at 1 point and 2 points to lock in profit in the event the market did not trade up to the final target. Would the trade be more profitable if I held on to the full position all the way to the target? Yes but that's a flawed way of thinking in that you're only focusing on the potential outcome vs. the process of active risk management. What if the market didn't trade up to the target and came right back at you while you're holding a full position?

Anyway, hopefully that makes sense. Larger opportunities may require larger risk which then would require larger scale outs to ensure your position is protected. The exact levels in which one decides to place their scales is up to them. The goal with this is to simply protect your core position in the event the market does not reach your target area and comes back against you and stops you out of your core.

That concept was something I always struggled with intellectually, but recently is making sense. I believe @greenr called it "banked risk" when we were chatting sometime in the past month or two (which may have come from you as I know he has great respect for you), and that terminology shifted something in my perspective.

On paper, given normal human logic (which is not always relevant to trading), taking a small profit on a majority of a position does not seem like a good strategy. And to a trader who has not yet secured an understanding of precise trade location and/or precise reading of market conditions, order flow, whatever the edge of the moment is, mathematically that approach does not work.

But as understanding of what is likely to happen and why, and more importantly, where, even though I could not explain the benefit as well as you could, it is making sense to me and it is something I have started to become comfortable with.

I used to have such internal debates about small moves versus long moves, what is "noise", is it better to win 80% of the time or 30%?

But for me, I settled into a belief that there is no right answer, because that would suggest that the future is more predictable than it is. What we CAN control, is risk, and that is it. And in futures, conditions change rapidly, timing is a very critical piece to refining trade skills.

Your comments initially seem to contradict the well known saying "let your winners run, cut your losers short", but that saying, as I am finding nearly everything in trading, needs to be viewed in context. As a swing trader, absolutely, but as a day trader it gets a little muddled.

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  #58 (permalink)
 
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 torroray 
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Hi PB,

You mentioned the have the fastest internet connection you can afford.

My question is, Why?

Its not like you be downloading or uploading huge file for trading.

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  #59 (permalink)
 
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 podski 
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@Private Banker

Great webinar you rattled through a lot of important stuff and I think that 90% of it was really put to bed Clear and clean no need to rehash it in any way. It is one of the top webinars I have seen.

Whether it is a webinar or a book, a thread or a post we all look at it differently. Our trading experience, emotional state and where we are on the road to consistency is what forms our individual lens or viewpoint. I think about this webinar differently today than I would have done a year ago for sure.

From my point of view the Core/Satellite concept is certainly something that I think you can build around. It is hard for a beginning trader to listen to a (very generous and open and much appreciated) 15 year vet and really take in things like:
"Don't focus on your W/L ratio" or "Don't worry about your P/L on a daily basis"


However this webinar very much delivered. You explicitly showed us why the process is valuable and why the immediate P/L is a bit of a distraction. It is the challenge of every trader to get to the stage where they can look at your trade examples and abstract them to their own markets and positions.

If I could suggest content for a 2nd Webinar or even just a 15 minute video it would be to
a. redo the 3 examples of the successful trades but dwell a little on
i. how the top down analysis was done
ii. the thought process when taking the initial position and the scale outs
iii. the end game where you said ... OK .. this is it I'm out ...
b. do a couple of examples of where you got it wrong and had to reconsider your long or short bias
i. where you can successfully say .. I was wrong so I looked to get short instead of long
ii. I was wrong .. wrong .. wrong ... so I went for a run with my dog ..
In any case , I recommend this webinar to everyone but especially people who:
i. chicken out of good trades at the beginning because they are unsure of their top down analysis (or don't have any).
ii. who sees their trades go into profit but then have the trades come back to their entry point or hit their stops.
This webinar shows you the tactical structure of what you need to do to make sure you make consistent profits and don't give it all back. It has the potential to strengthen your weak hands.


Thanks again PB,

p

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  #60 (permalink)
 
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 Private Banker 
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torroray View Post
Hi PB,

You mentioned the have the fastest internet connection you can afford.

My question is, Why?

Its not like you be downloading or uploading huge file for trading.

My reference to this was in regards to latency.

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