missed money vs. lost money

this is just food for thought.... not meant to rationalize my own trades.

you didn't make a certain move, and you missed $$$.... or, you make a move, but market goes against you, you lost $$$.

on surface these 2 events have the same effect on the bottom line... but they have different effects on risk-adjusted return....

if you are less selective in making moves, you will win a lot more and also lose a lot more, resulting in a choppy equity curve, and less than optimal risk-adjusted return.

on the contrary, being selective means you let go those iffy chances, and you may miss some moves... you only go in when it's so obvious that the crowd is wrong... the result is a smoother equity curve.

So there is a difference between the two.

所有跟帖： 

• just like the poker game -越王剑- ♂ (203 bytes) () 12/03/2010 postreply 07:20:25

• the key here is how you decide odds and what time frame -longterminvestor- ♂ (841 bytes) () 12/03/2010 postreply 08:22:05

• How can the 2 events have the same -ConeHead- ♂ (34 bytes) () 12/03/2010 postreply 13:09:33