71.2 % Win Rate

I'm not suggesting you should limit your trading to always having a predefined profit target. On certain days -- hard trend days as one example -- that would be an expensive proposition in terms of opportunity cost. But, at the tesing stage, it is so much easier and more comprehensible not to be free form; particularly for a novice. Use a set of numbers that makes up a full traders equation and see your result. Change the stop ... and/or change the target. Flip the numbers like you are making an omlette yet for each itteration have the full equation and allow it to spit out the result.

Once you have a winner to add to your arsenal by all means, as DB suggest, use your sense of conditions etc. to trade it and wring more out of it than rigidity would produce.

Quote from dbphoenix:

I disagree, which is the point I was trying to make earlier, but I don't want to make a big deal out of it.

If the guy wants to be a scalper, that's one thing. Otherwise, nothing is accomplished by predefining the reward. What is vastly more important is predefining the risk. Once that's done, focus on the win rate and trade management. If one wants to make a living at this. If not, then all of this is hardly worth the trouble.
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Quote from Swan Noir:

I'm not suggesting you should limit your trading to always having a predefined profit target. On certain days -- hard trend days as one example -- that would be an expensive proposition in terms of opportunity cost. But, at the tesing stage, it is so much easier and more comprehensible not to be free form; particularly for a novice. Use a set of numbers that makes up a full traders equation and see your result. Change the stop ... and/or change the target. Flip the numbers like you are making an omlette yet for each itteration have the full equation and allow it to spit out the result.

Once you have a winner to add to your arsenal by all means, as DB suggest, use your sense of conditions etc. to trade it and wring more out of it than rigidity would produce.
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If one is letting the computer do the testing, then, yes, it is easier not to be so "free form". But if the results of a computerized backtest are not replicable when traded for real, then it is in the end a waste of time and effort, except perhaps to persuade the trader that he needs to actually look at the charts and see what's going on.

Plus I don't use stops or targets, so the sort of test you describe would accomplish nothing for me. As for letting profits run on a trend day, how does one know in advance that it's going to be a trend day?

Sorry to sound argumentative, but none of this works for me and I never use it, or at least I didn't when I was backtesting, which I haven't done in years. Beginners may elect to go the computer route, but it is not a given, and using computers for backtesting is a recent phenomenon. Therefore it hasn't even reached the level of common wisdom yet.
 
I do all my testing manually so that was how I was viewing it; you're correct in that computerized allows you much more lattitude. I trade CL exclusively and it is impossible for me to even imagine that I would trade without a stop but others clearly do it -- and do it successfully -- all the time. I don't use, or even listen to, fundementals at all in my trading yet I do know that even a minor incident in the Straight of Hormuz has the potential to ruin my day. Do I think that my buy stop turning into a market order protects me/ No, but I might get lucky with it there and it is less likely if it is not a resting order.

I'm not suggesting that I can be sure that a hard trend day will continue in that mode (the crystall ball has been in the shop for repairs for a long time) but there are certainly days that by or even beore 9:30 EST that I can know and do know that I am in a hard trend and I must trade the day that way until I observe a change in the market.

I'm not suggesting my way is correct ... but it gets me a read on anything new I want to check out.
 
For me, the sample size is way too small as I require min of 3000 sample size. The drawdown might end up being much greater than 45%. But seems like a good starting point.
 
You on the right track, trading must be approached mechanically. When you find a potential positive expectancy setup, backtest it hundreds, if possible thousands of time. Convince yourself its positive expectancy so you can eventually trade it fearless in cash.

This is the beginning of the mark of a consistently profitable trader but the very first step is finding that one setup, then two, then three, eventually you make it, but at first, all you need is one.
 
Quote from Trader.Fighter:

You on the right track, trading must be approached mechanically. When you find a potential positive expectancy setup, backtest it hundreds, if possible thousands of time. Convince yourself its positive expectancy so you can eventually trade it fearless in cash.

This is the beginning of the mark of a consistently profitable trader but the very first step is finding that one setup, then two, then three, eventually you make it, but at first, all you need is one.
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Actually, plenty of people avoid mechanical trading, including me. Therefore there's no "must" about it. Nor does one have to concern himself with "positive expectancy" if he has a reasonably high win rate and profit to loss ratio. As for the backtesting, regardless of how many times one runs it, if lets the computer do it he won't get the same results when he trades it for real.

As for starting out with one "setup", if that's what one wants to call it, that I'll agree with, depending on how the setup is determined.
 
Quote from dbphoenix:

Actually, plenty of people avoid mechanical trading, including me. Therefore there's no "must" about it. Nor does one have to concern himself with "positive expectancy" if he has a reasonably high win rate and profit to loss ratio. As for the backtesting, regardless of how many times one runs it, if lets the computer do it he won't get the same results when he trades it for real.

As for starting out with one "setup", if that's what one wants to call it, that I'll agree with, depending on how the setup is determined.
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You misread me, by mechanically I meant trading the plan 100% not automation.
 
Quote from Huskeez:

Hey guys,

I ran a few backtests a while ago (but with limited flexibility in terms of parameters), and was able to find a strategy with a pretty high W/L % (based over 10 years od DOW data)


Now, do you guys think its possible to use the strategy which gave the W/L % and apply a reward/risk ratio of 3:1

(if I could interpret this into the backtest I would but unfortunately my skills are not quite there yet)

I will begin paper trading this , and see how I get on , but was pretty interested to see if this is how some other traders evolve their system.

Cheers Benji
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Whole problem with this thinking is you didn't already apply a 3:1 rule to your w/l % analysis in the first place (you wrote that you didn't). If you didn't, you will most likely get stopped out in live trading so many times (the "1" in the 3:1) that your beautiful 71% will turn into a very sour number.
 
I'm just learning to trade and have tried several different methods. I have no mentor so it has been tough. The last 13 days have been good as I have increased my account by 65% with three trades.

I see some people talk about the 2% rule of capital. Does that mean 50 different trades going? I could not keep track of that! 71% win rate would be amazing.

I have been using my BIC method. Balls Intuition Confidence. It will prob cost me some cash soon tho...

Tim
 
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