Key!!!
-A system-based trading strategy
-In general, the answers the industry offers are various takes on the following: The strategy or manager with the highest risk/reward ratio.
-Rich and Bill were very concerned with the size of our positions because they knew that there was a risk of losing their entire net worth if those positions were too large during a large adverse price movement.
-The silver market was locked down limit for days and days. This meant that there was no opportunity to exit because there were no traders willing to buy within the limits imposed by the COMEX futures exchange on how much the price of silver could change in a single day.
-Contrary to the popular notion that Rich was sometimes a gunslinger, in my experience he was very careful with his risk.
-Most traders worry about four primary risks:
• Drawdowns: Strings of losses that reduce the capital in their trading accounts
• Low returns: Periods of small gains in which one does not make enough money to live on
• Price shocks: Sudden movements in one or more markets that result in a large unrecoverable loss
• System death: A change in market dynamics that causes a previously profitable system to start losing money.
As more and more money flees from trend-following strategies, those strategies start to become profitable again, often spectacularly so. At least three or four times since the Turtle program began someone has made the claim that trend following has ceased to work. I always laugh at this, knowing that profitable markets are most likely quite near.