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"Once (if..) you've made some profit, take out your initial investment and now you're gambling with free money." I never understood this sentiment, and I'm sur
by dkyc 9y ago
"Once (if..) you've made some profit, take out your initial investment and now you're gambling with free money."
I never understood this sentiment, and I'm surprised to see it so often on Hacker News. It's irrelevant whether the money came from profits or initial investment - money is money? There is no need to distinguish the both, it's purely psychological.
- lev99 9y agoIt's a classic example of loss aversion[0]. In my mind the real loss risk of this venture is the opportunity cost spent developing the algorithm. Many people that fail to build trading algorithms would have been very successful if they invested their time/expertise doing something else. The person stands to lose not only his cash investment, but all of the cash he could have received if they focused their efforts on a less risky venture[1]. [0] https://en.wikipedia.org/wiki/Loss_aversion https://en.wikipedia.org/wiki/Loss_aversion [1] I'm all for risk, but Vegas has better odds.
- csomar 9y agoIt makes no sense. That's why I suggest you look for advice from seasoned guys. The average guy is very emotional to trade regardless of their technical and financial background. There is zero reasons to lose money or carry on running a losing strategy. If you are trading professionally and quantitatively, you are runnings lots of positions. Unless you have a technical issue, you should not worry about losses on one or a few positions since you only care about what your average is doing. That assuming your models work but you should not start trading with real money before you are certain of that.