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Jim Dean

Posts: 3022

Joined: 9/21/2006
Location: L'ville, GA

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Subject : RE: Most and Least-Useful PortSim Alloc Methods
Posted : 8/31/2018 6:35 AM
Post #45297 - In reply to #45294

I know this has been a lot of info to digest. So, here is the main point I’m trying to make, using the examples previously provided …

The KEY ISSUE in this allocation debate, *insofar* as it applies to testing and development A vs B vs C comparisons, hinges on COMPOUNDING. % Equity allocation naturally uses compounding. Fixed $ (either measured by per-trade Capital-commitment or by per-trade Risk-exposure) does not suffer from the potentially horribly-misleading decisions which compounding sets the stage for.

Using popular lingo, I would classify results and decision making from Compounded allocation while testing A vs B as “Fake News”.

This is true for stocks, futures, forex, options, mutual funds, bitcoin, Texas hold’em, and Ponzi schemes. It’s just basic math and scientific method.

[Edited by Jim Dean on 8/31/2018 6:37 AM]

Deleting message 45297 : RE: Most and Least-Useful PortSim Alloc Methods

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