Quote from jack hershey:
OP,
Congratulations on your recent year of continuing success.
The rest of my post will be convoluted and, of course, my first post in every thread is pontificating.
It is my expience that people who begin to do better, continue to improve. Take out you initial capital and use it for its prior intended purpose. This will add to your feelings of success since you are now ONLY trading on profits for the rest of your life. Ultimately, full time trading is not a habit of most successful traders. The rate of income generation precludes having to trade full time. At first this fact just appears as a thin stream of campfire smoke rising on a distant horizon as your pont takes you down the trail....... Reynolds Numbers do not apply to campfire smoke in low humidity climates..... It is all non turbulent laminar flow when you get on the right trail..
As time passes watch how using additional capital from profits shrinks the time required to get to your current monthly 10 to 15% success rate. As you add to profits, you will see that the % of profits per unit time grows. It is the result of two things: being in the market more of market time and doing better at timing in the markets.
Sharpe ratio is a timing tool if you change its use. Use it to be sharp. For example, use a signal generator to tell you which side of the market is the right side. Notice this Sharp timing tool is great for changing sides of the market when the Sharp indicator says the right side of the market has changed. You can make it doubly sharp by staying in trends their whole duration Trends are double ended, so stay sharp at each end.
Trends overlap too, so you can watch that. This is where Profit factor comes in. It is a measure of trend overlap. Here you get the "two for one" effect; hence profit factor. It is also known as what goes up must come down and in terms of elasticity coeficients, the reverse is true. The Silly Putty inventor got a Nobel Junior Prize for this from the children of the King of Sweden. Here is how you get two for one. You watch the price struggle to extend the trend. When under peaking volume it stops its getting there, you quickly and firmly, exercise the profit factor trade called a reversal. you get two for one this way during overlap.
There is a corrolary too. This is where S becomes R and vice versa. It was invented in Sortino an Island off the coast of Sweden originally settled by little known pasta makers. The PF is related to the Sortino. as you see price humps down or humps up. Humping is how pasta is made free of air. It is called squeezing and rolling; hence the S and R shorthand.
Another expression for going down is called humping it is a combo of rolling and squeezing, more or less. Going long is the opposite type of humping: you squeeze off first and you finally hit R and rollover with a profit factor overlap. It all involves being sharp and rolling over after a good humping.
Actually as you become more sharp, you can increase the frequency of humping on a faster fractal. There is more Sortino humping and PF' ing (F'ing, in floor trader humping shorthand). The Sharp ratio is greatly enhanced on each faster fractal. By being sharper and PF humping faster, you get the same bottom line results in a much shorter period.
There is a lot of Eastern literature on all of this. They originally disguised the printing and mailing of books and tools on this as "candlesticks". women loved them inbewteen preparing rice in bolws long ago (between humpings, too)
Currently, the money velocity is running at about 5% an hour in ES.
Again congratulations. Update your use of Sharpe, PF and Sortino, by all means.
Another Nobel for AZ. Power to the beaver growers.
This post is dedicated to Bentedge.
