Suppose the third leg of the stool was the fact that 80% of his trades resulted in profit and that another 8% were either smaller than 6 tick loses (say 5%) because he moved the stop closer when he had a few ticks in the trade or scratch trades (maybe 3%) because he moved the stop to "break even" on some and on a piece of his intitial position -- say 25 to 35% -- he let it swing as he cashed the rest for four ticks and moved his stop to break even on the remainder?
If you then looked at the risk/reward ration for the strategy as whole how might you characterize it?
I, for one, given those inputs, would call it a winner.
What we express here when the exchanges flow is more akin to a conversation than a deposition. I believe the way to pick up value from those I speak with is to engage them in give and take and see if good ideas occasionally percolate. Must days they won't but that is OK.
I prefer to have conversations run in ways that are productive (or at least are potentially so) rather than stopping to quibble over language. Big misconceptions probably must be noted on the spot but the rest of it is part of the flow of how many of us interact conversationally.
BTW ... life insurers (casualty, auto and others as well) make "trades" everyday where they take a check of under a thousand dollars for the first month's premium and go on the line for a million, two million (or more) dollars in potential payout that could literally happen 24 hours later. And they make money by doing trades like that day in and day out.
It is hard to opine on the equation unless you have all the relevant inputs. The percentage of winners/losers/scratches is clearly such an input.
Al Brooks writes that he routinely risks eight ticks and cashes the scalp portion of his trades for four ticks. Presumably he likes to eat at least a couple or three times a day and continues to fund those meals by trading that way.
Or do you believe that his book is simply a fraud and that he either trades another way or feeds his family by generating non trading revenue?
Monty, I am not telling you what you should believe I am simply stating how I view a forum such as ET.
Quote from monty21:
Wait what?
You are risking 6 ticks to make 4 ticks... and say that "real traders" know that is the right thing to do?
Are you crazy... that's a horrible risk-reward ratio.
What real traders are you talking about? The author-"traders" lol? No trading desk would take you seriously.
...u must be the thickest poster on this dumb ass website...for you have as much knowledge about trading as the 10 year old that beat the wall street experts
i will give u 5 years to work it out
