Yeah, that's exactly what I was thinking.
Kev
3 to 1 win/loss ? Don't think so.
- Thread starter tradersaavy
- Start date
Yeah, that's exactly what I was thinking.
Kev
I think the ideal attitude is not to think about any ratios at all, but to maintain strict discipline on the losing trades, while leaving the winning trades open-ended. Just because you set tight 1 or 2pt stops on your NQ losers doesn't mean you should "deserve" six points at best -- if the situation is right and your risk points are well defined (a head and shoulders formation right at a 3-month resistance level, for example), you should try to accustom yourself to the possibility of taking far more than what your "avg" winner has so far been -- 15, 20, even 30 pts or more. The faster you get "used" to taking larger profits (meaning the ability to stay focused, even in the face of a windfall profit) the better you will learn upside discipline -- the ability to sit with your profit. Of course its all relative to your time frame, but its a skill daytraders, swing traders, and investors alike can benefit from.
I know I start squirming in my seat if a position goes far past my initial profit "target", almost as badly as when a losing trade gets away from me, and it takes alot of willpower to be able to refrain from selling "just because" vehicle X happens to be trading Y pts above wherever I entered, but instead to continue to objectively weigh the risk vs future rewards, if any, in holding that position.
I know I start squirming in my seat if a position goes far past my initial profit "target", almost as badly as when a losing trade gets away from me, and it takes alot of willpower to be able to refrain from selling "just because" vehicle X happens to be trading Y pts above wherever I entered, but instead to continue to objectively weigh the risk vs future rewards, if any, in holding that position.
Not only is this simulator good for trading system analysis but it can also be used to calculate fluctuations and bankroll requirements for poker players.
I play a 4/8 omaha high game regularly and found the fluctuations to be huge. Using this simulator i found that swings of +/- 1500 dollars were not really that uncommon. 453 trials would represent about 18 hours at 25 hands per hour.
for interested poker players i used
w/l 7.58
win prob 0.122
kelly was 0.006 so you would need a bankroll of 167 times what you would invest in the average hand. 166 * 14 or $2324.
Math Exp was 0.046 so I calculated a win rate per hour as follows
25 hands per hour times 41 percent playable hands times 14 dollars average per playing hand times the advantage of 4.6 percent and it comes to 6.60 per hour. Pretty grim but of course bigger games would give bigger results.
A great little program!!
I play a 4/8 omaha high game regularly and found the fluctuations to be huge. Using this simulator i found that swings of +/- 1500 dollars were not really that uncommon. 453 trials would represent about 18 hours at 25 hands per hour.
for interested poker players i used
w/l 7.58
win prob 0.122
kelly was 0.006 so you would need a bankroll of 167 times what you would invest in the average hand. 166 * 14 or $2324.
Math Exp was 0.046 so I calculated a win rate per hour as follows
25 hands per hour times 41 percent playable hands times 14 dollars average per playing hand times the advantage of 4.6 percent and it comes to 6.60 per hour. Pretty grim but of course bigger games would give bigger results.
A great little program!!
Actually, the truth is I'm not very far from it now - but I also don't scalp, I trade daily ranges - I wouldn't think that with scalping it would be possible.
Since I started monitoring each and every trade, I have narrowed down to three setups only, with each having about 75% probability of hitting my profit target and beyond. I trade from 1 to 6 times per day, avg. of 3 trades daily.
So in other words, when I wait patiently and don't trade unless ideal conditions present, I hit the right overall market direction three times out of four. The other time I am wrong about market direction and of course get stopped out.
My avg. stop-loss is 3 points and my avg. win is 6 points, so I have already achieved the 2 to 1 RtR, although admittedly not consistently yet due to execution rather than method. I was having a problem with scratching trades that ended up being winners (I was under the delusion that I was doing a good job keeping losses small - I found out otherwise when I started really tracking my trades)
I will concede that I often blow the execution necessary to maintain these figures. However as I have been ever more carefully monitoring my trades, I am slowly learning how to not jump the gun. This is the usual cause of my failure on the hit rate.
So you all just keep telling yourself it's not possible and I'll just keep trying to prove that it is until the facts say otherwise.
Right now they don't.
Repectfully,
Paul
Thanks for sharing your ideas. In reference to reducing position size, that is what I am discovering as one of the main adjustments that needs to be made. When trading only 1 contract there is no option of reducing size. When trading shares, of course any stop size can be adjusted to tolerance by reducing shares. Perhaps only the tightest of 5m setups are the ones that can be taken. And, perhaps, if only the tightest of patterns are taken and only the best patterns at the strongest support/res. then a 75% win rate will be acheived !
Hi T-Kay,
This was the hardest question for me to solve on my trading plan - The answer is discretionary, but since I am only trading the same three setups it is somewhat mechanical as well.
The mechanical part is that I WILL NOT enter a trade that doesn't fit one of my setups - period. At least when I am executing properly and emotionally sound. (sometimes I'm not)
But the interpretation of whether or not the setup is present is discretionary - but once identified the parameters are basically mechanical.... i.e. each setup has a different Stop and Target. These are the same every time for each setup.
Mostly I focus on when NOT to trade, it seems. Since it so easy to "see what we want to see" I have some filtering mechanisms to prevent trades on the lower end of the hit rate, even though the setup may be present on the chart.
Do I sound as confused as I think I am LOL
? My God, no wonder I don't trade worth a shit sometimes.Hope this helps but I don't know how it could...
Best,
Paul
Magna
Administrator
Paul,
I wish you well on your quest. Using your numbers of avg 3 trades daily (yielding approx 700 per year), with your 6 pt target and 3 pt stop (to give the 2:1 R/R) and 75% hit rate here's what I came up with. That's 525 winners for 3150 pts, 175 losers for -525 pts, or 2625 pts net. Times $50 and you get $131,250 per ES contract. Wow. I admire a man with dreams....
Good luck.