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Don Schlesinger: Shortcut
> But, as
> initial ROR goes up, the difference between
> the correct new answer and double the
> original answer is not quite as dramatic as
> "almost double." So, for 10% ROR,
> the new answer might be something like 18%.
With a little simple algebra, it occurs to me that if x is the original ROR, in decimal form, and we're looking for the formula to express total ROR if we plan to siphon all profits, should we double, then the new ROR is just: 2x/1+x.
I'd like to make another suggestion, if I may. When I was trading, I often wondered if I should stay with a position, or take it off. My colleague used to remind me that the decision didn't have to be "all or nothing." He used to advise me to take off half of the position. That way, I could never be 100% right or 100% wrong; it was a simple compromise.
The analogy here is that, if siphoning off ALL profits at the doubling point increases your initial ROR to unacceptably high levels, the alternative to waiting until you triple or quadruple a bank, to take any profits, is to take only half of your profits, once you double, rather than take all of them. You get to spend some money, and your initial ROR isn't increased as dramatically. A nice compromise.
Don
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ET Fan: Typo
With a little simple algebra, it occurs to me that if x is the original ROR, in decimal form, and we're looking for the formula to express total ROR if we plan to siphon all profits, should we double, then the new ROR is just: 2x/1+x.
Correct, but you need parentheses in the denominator:
2x/(1+x)
Rather important parentheses, in this case.
ETF
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Don Schlesinger: Re: Typo
> Correct, but you need
> parentheses in the denominator:
> 2x/(1+x)
> Rather important parentheses, in this case.
Technically, you're right, but there's little chance for confusion here. I'm sure everyone understands that I didn't mean 3x, because I would have said so, if I did. After all, what would have been the point of writing 2x as 2x/1?
Don
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ET Fan: Chance for confusion
Technically, you're right, but there's little chance for confusion here.
This from the PRINCE of spelling critics? ;-)
Person enters it into his calculator, gets the answer, and relies on it. Happens all the time. Not everyone speaks algebra as a language. Not everyone who speaks it looks carefully every time.
ETF
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Don Schlesinger: Re: Chance for confusion
> Person enters it into his calculator, gets
> the answer, and relies on it. Happens all
> the time. Not everyone speaks algebra as a
> language. Not everyone who speaks it looks
> carefully every time.
I wasn't thinking of the calculator, and how it automatically respects the order of operations. You're certainly right.
One of the problems of the keyboard is that, when you write a fraction, you don't get the choice of expressing it with a horizontal bar to separate the numerator and the denominator, instead of the diagonal virgule (/). So, writing something like 2x/1+x can't be expressed in the unambiguous way that the horizontal bar permits.
So, 2x/(1+x) it is!
Don
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Don Schlesinger: By the way, . . .
. . . when did I get demoted to prince?! :-)
Don
>This from the PRINCE of spelling critics? ;-)
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