Portfolio Considerations of a Trading Strategy (Part 3)

In the last post I argued that commercial interests do not care about our portfolios as a whole. What they offer is not suitable for live trading despite their misrepresentation to the contrary.

That’s optionScam.com.

In a similar vein, traders rarely talk openly about position size when associating with each other. I have participated in or watched hundreds of trading group webinars over the last several years. Traders repeatedly present under the guise of “small positions.” It goes without saying that position sizes and account values [if] shown are arbitrary and uncorrelated with actual risk and total net worth, respectively, of the individual presenting.

Western culture is probably not alone in classifying the disclosure of wealth details as inappropriate for public discussion. This holds true for degrees of association ranging from stranger to all but the closest of family.

The problem arises when the sole arbiter of whether a trading system will work depends on the position size itself. I suspect this occurs much more than realized and has everything to do with individual differences in risk tolerance. I have touched upon this concept repeatedly as the moment when drawdown becomes sufficiently large to cause sleepless nights or persistent mental anguish. From this perspective, any particular trading system may be acceptable for some and too risky for others.

Does it even make sense to share position details without sharing total net worth? Whether the position ends profitably often depends on the ratio between maximal margin requirement (i.e. risk) and total net worth. If this ratio becomes too large then the position is closed at a big loss. Not sharing this information is to discuss position management without portfolio considerations: an artificial exercise, at best, if the two are in fact inseparable.

Does this reek of commercial interests offering position recommendations without regard to total account value or trade size? Commercial interests are not viable as trading systems and are therefore optionScam.com.

I fear the sad truth may be that association with other traders can fare no better. Association with other traders may be yet another version of optionScam.com.