1% per trade

[bronks]

Hey Lundy, it's past your bedtime aint it?

 

[lundy]

bronks ,

i'm in a trade I call sleepless nights, see my new journal.

what about you? markets aren't on hawaiian time last i checked.

 

[bronks]

Watching the Laker game. I will check out your journal.

 

[Rigel]

And I think it's hard getting up at 5:30am.

 

[Gordon Gekko]

i'm gonna rephrase my point.

what is the likelihood of your target? wouldn't someone whose profit objective is 3% get more targets hit over someone whose profit objective is 30%? i'd say a stock moves 3% more often than it moves 30%.

 

[docarzt]

what is the likelihood of your target? wouldn't someone whose profit objective is 3% get more targets hit over someone whose profit objective is 30%? i'd say a stock moves 3% more often than it moves 30%.

don't think in % think in R-multiples. Than you have to say what is the probability of a 30% gain with a 10% stop or was is the probability of a 3% gain with a 1% stop.

In my trading high R-multiples (min 2R better 3-4R) are much better and easier to achieve than a high probability with a 1R multiple.

you enter a position, you don't get stopped out, you use a trailing stop, you want to get a big gain, so you let it wiggle, if you're too strict, you're gonna get stopped out with a small gain again, so you trail your stop under the previous day's low. today is a big up day, you have a 6% gain. tomorrow the stock opens a little lower, sells off and goes under the previous day's low, you got stopped out with a small gain again

sure, this happens, but with good exit rules you probably would have gotten out on the 6% day.

 

[daniel_m]

Originally posted by Gordon Gekko
i'm gonna rephrase my point.

what is the likelihood of your target? wouldn't someone whose profit objective is 3% get more targets hit over someone whose profit objective is 30%? i'd say a stock moves 3% more often than it moves 30%.

Yeah, that I agree with. Of course there are more opportunities to catch 3% moves than 30% moves. To give you a daytrading example, take a $50 stock, of course there's many more opportunities to make 10cents than to make $1. It doesn't mean it's "easier" to do though.

 

[Gordon Gekko]

Originally posted by docarzt


don't think in % think in R-multiples. Than you have to say what is the probability of a 30% gain with a 10% stop or was is the probability of a 3% gain with a 1% stop.

yes, i agree those are equal relationships. but i'm saying, since those 2 examples are equal....and there is a lesser likelihood of a 30% profit target than a 3% profit target, wouldn't it be wiser to go for smaller, more likely gains?

 

[daniel_m]

Originally posted by Gordon Gekko


yes, i agree those are equal relationships. but i'm saying, since those 2 examples are equal....and there is a lesser likelihood of a 30% profit target than a 3% profit target, wouldn't it be wiser to go for smaller, more likely gains?

I'm not sure that the relationships are linear. ie, 1%stop/3% gain = 10%stop/30%gain. So much of that depends on the strategy you employ.

Whether it's "wiser" to go for smaller gains, I think, largely depends on what you're comfortable with.

 

[Ditch]

I'm trading the NQ's. I think, that you have a very good point. Yesterday got me thinking about this subject too. Letting profits run long doesn't work in this market. There are hardly any straight moves over 10 pts. nowadays. I 'll start using a profit target of 5 pts. The number of trades where I've given back 5 pts. and got stopped out at 0 again are numerous, so this should improve my bottom line considerably.