As I mentioned in the post 3, about the "speculators" they apply an optimal adjustment back-office method that multiplies their profits reduces the risk, and does not need a forecasting of the market. Warren Buffett and many other succesful investors apply this technique as a paramount and basic neccesity in investing and trading.
During 1998 while studying in the University of Portsmouth, I discovered a theorem in the book "Stochastic Differential equations" by B. K.Oksendal (Springer editions) page 223, example 11.5 where he proves through the ITO stochstic calculus that such an adjustment as above is optimal during a constanttrend against just buy-and-hold , and maximizes the probability to have positive profit
We may apply optimal adjustments of tradable funds. This means that we divide the funds in to tradable (e.g. 66%) and non-tradable (33%). Al trading is based only on the tradable funds, which in their turn are divided in to usable for margin, and risked e.g. by stop-loss in a trade or excursions, and those reserved for next trades. Then at the start of the trading we mark the equity level E0. For every dE increase from this E0 level or previous level during trading (e.g. dE=5% over all funds) we adjust by in increasing by 2.5% the non-tradable, and decreasing by 2.5% the tradable, and for every dE decrease from E0 or previous level during trading, we adjust by in decreasing by 2.5% the non-tradable, and increasing by 2.5% the tradable so that the ratio 33% of non-tradable funds to all funds, remains approximately constant.
