Improved profit and loss reporting
(09-09-2018, 10:36 PM)BotsEdge Wrote:
(04-08-2018, 12:52 PM)askmike Wrote: To follow up on the discussion here:

Quote:When trading, selling is just as risky as buying. The situation is symmetrical, selling one currency is the same as buying the other. The risks are that the price goes up further after you've sold, or goes down even lower after you've bought.

Not completely correct. If you sell an asset empty (meaning actually going short) the price of this asset could go up without any limit whereas if you buy an asset (meaning actually going long) the price of the underlying asset can only go down to zero. So in the trading world a real short trade is considered a lot riskier than a long trade. This means that all trades have to be based on a portfolio management system, consisting of at least a risk defining procedure as well as a money management tool which defines the position size to trade next.

Quote:Trading a partial balance helps mitigating this risk. It allows you to 'walk into' your position. When you've bought some and the price unexpectedly drops, you can buy some more. This brings the average price at which you bought, closer to the bottom price.

This kind of thinking when trading at any market is very dangerous. It is called DCA or dollar cost averaging and a lot of the trading bot programmers especially those who actually try to sell their trading bot software are using DCA as a marketing tool.
In the real trading world cost averaging on the way down will kill your portfolio at a given point in the future since it contains a deadly misconception. It assumes, that an asset falling right now will eventually recover. But in the real world it does not need to do this it can fall until it hits zero.
As a high profile example from the real world take the Enron stock in the nineties or take Lehmann Brothers stock back in 2008. A lot of people thought that a huge bank like Lehmann Brothers would not stop existing so they bought even more stock when that thing was in free fall. We all know how that ended.
So, yes DCA can be a tool in Gekko but it needs to be in an advanced mode and needs to carry a serious warning tag.

But in general i agree that Gekko needs some kind of advanced mode where experienced traders can go and set their money management profile and their risk levels.

It would be nice to be able to create math that trades more agresivly or more carefullly when it knows it reached a portofolio of x% above its invested money. And to trade less risky when there is y% left of the investment.
I think its quite benneficial to know your actual portofolio for a lot thinkering with trading math.
Clear readable data is always handy
[....Resistance is futile...]

Messages In This Thread
Improved profit and loss reporting - by Hilko - 04-08-2018, 09:02 AM
RE: Improved profit and loss reporting - by Hilko - 05-19-2018, 05:45 PM
RE: Improved profit and loss reporting - by Hilko - 05-20-2018, 08:57 PM
RE: Improved profit and loss reporting - by PGTART - 09-29-2019, 08:23 PM

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