Trader's Toolbelt

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Tyler D. Coates
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Trader's Toolbelt

Post by Tyler D. Coates »

Mycologic
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Re: Trader's Toolbelt

Post by Mycologic »

Another great video! Pretty stoked about the future of this site my man!!!!
c277c8e4af
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Re: Trader's Toolbelt

Post by c277c8e4af »

Great resource! I would be interested in calculating the risk for a trade that is entered with a ladder.
fireblade-au
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Re: Trader's Toolbelt

Post by fireblade-au »

For the lazy, anyone know of any position calculators that also include with leverage calculation they find useful?
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Re: Trader's Toolbelt

Post by Atcurrentprice »

Really good vid! Quick question, i switched to bybit only because bitmex was saying i would have to kyc by a certain date. Can you still have an anonymous account on bitmex?
Tyler D. Coates
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Re: Trader's Toolbelt

Post by Tyler D. Coates »

c277c8e4af wrote: Tue Feb 16, 2021 10:52 pm Great resource! I would be interested in calculating the risk for a trade that is entered with a ladder.
Average out the entries and stops. For example:

buy $50,000 and $45,000 with stops at $42,000 and $38,000. If entering equal amounts then average entry is $47,500 and average stop is $40,000. Therefore the estimated risk would be 15.78%.
Tyler D. Coates
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Re: Trader's Toolbelt

Post by Tyler D. Coates »

Atcurrentprice wrote: Thu Feb 18, 2021 3:01 am Really good vid! Quick question, i switched to bybit only because bitmex was saying i would have to kyc by a certain date. Can you still have an anonymous account on bitmex?
Unfortunately not
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Re: Trader's Toolbelt

Post by riotcontrol »

Awesome resource! On the topic of the Kelly Criterion - If I understand correctly, it seems like the calculation takes on a different approach to risk management than the usual risk amount calculation traders are used to. So if your 60% strike rate translates into using a position size of 20% of the bankroll - it seems like it means that if you only bet 20% all or nothing on a 60% win rate you should increase your bankroll over the long run.

So if that is true, does that mean that when traders use the usual SL%=(stop-entry)/entry calculation to determine position size they should use 20% of the bankroll as the risk amount? That could be a substantial position size. Makes one get a bit eager.

If I have $100 bankroll and $20 to risk then that means my position size would be
20/SL%=position size which would be MUCH greater than 100 if my SL% is any value less than 20%.

The other thing it implies is that if you don't have a greater than 50% strike rate then you should just stop trading all together because you have no edge in the market so stop trying and go to the investor video. Because .5*2-1 = 0 and anything less than 50% would mean using negative % of the bankroll.

Are all these the correct interpretations of the Kelly Criterion? Thank you for any suggestions/feedback!
Tyler D. Coates
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Re: Trader's Toolbelt

Post by Tyler D. Coates »

One interpretation that I would disagree with is:

"if you don't have a greater than 50% strike rate then you should just stop trading all together''

Kelly Criterion doesn't account for discrepancies in risk:reward and always assumes an equal risk to reward. If the risk:reward is 1:1, or less, and the strike rates is 50%, or less, then it will not be profitable over the long run. However if the risk:reward is 1:5 and the strike rate is 40% then that would be a very profitable system however the Kelly Criterion formula wouldn't apply.
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