A 70k bet that I can't make a 50% gain in 2009

[bozwood]

I have a question about the ability to scale this methodology. Now, this is not meant as criticism at all because I have learned a lot and the results have been very good.

However, it seems that with even a $200 stop as geez used before, a limit is starting to be reached making it difficult to scale the strategy up to larger stop sizes. I could be wrong here, so please correct me if that is the case. If I am right, would an answer be to only trade in ultra-liquid stocks or possibly move-up in time frame to, say, 15 min charts?

Thanks

 

[puddles]

Quote from bozwood:

I have a question about the ability to scale this methodology. Now, this is not meant as criticism at all because I have learned a lot and the results have been very good.

However, it seems that with even a $200 stop as geez used before, a limit is starting to be reached making it difficult to scale the strategy up to larger stop sizes. I could be wrong here, so please correct me if that is the case. If I am right, would an answer be to only trade in ultra-liquid stocks or possibly move-up in time frame to, say, 15 min charts?

Thanks

For a $200 stop you're talking about 400-1000 shares.

If you look at the symbols I've traded the last few days they're all doing between 50-100k+ of volume per 5 minute bar.

 

[bozwood]

You're right; maybe I am underestimating the scalability. Is there much slippage with the $200 stop size?

Also, I am curious what you or geez think would be the top limit in terms of stop $ size that could be traded with this strategy?

Quote from puddles:

For a $200 stop you're talking about 400-1000 shares.

If you look at the symbols I've traded the last few days they're all doing between 50-100k+ of volume per 5 minute bar.

 

[puddles]

Quote from bozwood:

You're right; maybe I am underestimating the scalability. Is there much slippage with the $200 stop size?

Also, I am curious what you or geez think would be the top limit in terms of stop $ size that could be traded with this strategy?

I've never looked into the upper bound. I can't wait to get there though.

 

[jim c]

Quote from bozwood:

You're right; maybe I am underestimating the scalability. Is there much slippage with the $200 stop size?

Also, I am curious what you or geez think would be the top limit in terms of stop $ size that could be traded with this strategy?

Puddles rocks! Hey bozwood. I was going to ask the same question a few weeks back. After all the idea is to go SIZE eventually! I have just started trading this method (about a month now) but I only risk 100.00 bucks per trade. You can really have some P&L swings with just this amount. I might even say start with 50.00 stop loss at first.

To answer your question, at least for me, this strategy is very scalable. I think you might be suprised. I know I was. Jim

 

[bozwood]

jim c.,

thanks for the reply; how have you been doing over the last month trading this way?

Quote from jim c:

Puddles rocks! Hey bozwood. I was going to ask the same question a few weeks back. After all the idea is to go SIZE eventually! I have just started trading this method (about a month now) but I only risk 100.00 bucks per trade. You can really have some P&L swings with just this amount. I might even say start with 50.00 stop loss at first.

To answer your question, at least for me, this strategy is very scalable. I think you might be suprised. I know I was. Jim

 

[puddles]

<img src="http://puddles.humanfund.ca/20100616/spy.png">

<img src="http://puddles.humanfund.ca/20100616/cf.png">

<img src="http://puddles.humanfund.ca/20100616/sun.png">

<img src="http://puddles.humanfund.ca/20100616/mrk.png">


9:47

SHORT CF 64.09
STOP 64.23
TGT 63.81

- SPY gaps down but shows strength
- CF gaps down and heads lower
- short under a tight bar
- I could have possibly waited for LOD to be touched again
- out -0.14

9:50

LONG SUN 34.5
STOP 34.21
TGT 35.08

- SUN gaps up and runs, a real beast this morning vs SPY
- Enter over the higher low
- I got ticked out in under 2 minutes
- out -0.29

9:59

LONG MRK 36.09
STOP 35.99
TGT 36.29

- MRK very strong from the open making new highs
- Look to go long over the higher low
- out -0.1

I stop trading if my day goes 0-3..

http://puddles.humanfund.ca/wp/2010/06/16/2010-06-16-trades/

 

[JScott]

Quote from jim c:

Puddles rocks! Hey bozwood. I was going to ask the same question a few weeks back. After all the idea is to go SIZE eventually! I have just started trading this method (about a month now) but I only risk 100.00 bucks per trade. You can really have some P&L swings with just this amount. I might even say start with 50.00 stop loss at first.

To answer your question, at least for me, this strategy is very scalable. I think you might be suprised. I know I was. Jim

A few additional thoughts:

1) Targeting liquid stocks with higher prices tends to also help (requires fewer shares obviously)

2) While there are times when signals are given on a number of stocks all at the same time, it's still relatively easy to put on quite a few trades more than Puddles is doing. If you subscribe to the set it and forget it (mostly), then you can scale up by simply putting on more positions and keeping your risk amount the same per symbol - semi-automation is very possible here as well.

Thanks for continuing to post charts, Puddles.

JS

 

[NoDoji]

Quote from Sam Morgan:

........and the thread, it seems, has re-ignited itself, albeit with Geez and The Gang assuming new positions

Careful, Sam, with this kind of talk around Geez. It's bad enough I asked a "size" question.

Quote from Sam Morgan:

Geez, thanks for coming back (as a mentor, this time round) and helping the rest of us trying to get there.

NoDoji, thanks for the input (as an assistant mentor?) you have on Puddles trades, it give an additional insight to Geez.

Puddles, a big shout out to you, for putting up the charts and your trades; we are learning a lot from this.

This has always been one of my most highly recommended threads for anyone asking me about trading. I tell these people, check out this journal, see what happens when you a) trade with the trend or wait for confirmed reversal signal, b) have a positive reward:risk ratio, and c) leave the trade alone and let it do its thing.

It took me forever to incorporate what Geez taught me into my actual trading. I'm really stubborn, so first I have to mess up a lot, then have to spend months in sim ensuring that something really works before I'll start working it.

The good news is that when I trade like this, guess what? It works!

I have a special thank you for Puddles because he was always jumping in and out of POT and scalping these quick profits. It got me looking at POT on a regular basis. I realized how much I liked POT and I started craving POT. I simmed POT for a while, then went live and before you know I was just smoking POT all the time

Quote from puddles:

nod, you should swing by one day..

Yes, I should! I'm in a Skype group of ES traders, we all wanted to learn various tactics from each other, but I believe I have corrupted them as they've started sim trading crude oil, which is more addictive than POT, and definitely leads to actual trades.

But I promise to visit, especially with the gang assuming new positions

 

[puddles]

Quote from NoDoji:

I have a special thank you for Puddles because he was always jumping in and out of POT and scalping these quick profits. It got me looking at POT on a regular basis. I realized how much I liked POT and I started craving POT. I simmed POT for a while, then went live and before you know I was just smoking POT all the time

heh, i gave up the scalping.. Just trying to take clean correct setups and hit the 2:1 r:r and 50% win rate these days.