Can Anyone Be Successful In Trading.... With Only About 50% Win-Loss Rate?

[Alpha Trader]

Smaller reward..higher probability trades..higher initial risk...trades usually have higher win rates. It is inherent. But you need the "initial" bigger stop-loss (i.e. High risk) for the times those blasted algos and HTF's try to do their BS on you. Higher probability trades require a bigger stop-loss initially to maintain a high win rate or you will get stopped out of a perfectly good trade that you got the direction correct but your SL was too small and after taking you out the markets goes immediately in your original direction. In other words, occasionally, some high probability trades have deep pullbacks before they actually move in your direction so you don't want to not get stopped out before the move starts. That is why you have a bigger stop-loss.

@volpri thank you for having laid all this out in a very comprehendible manner; I am in agreement with you on pretty much all of it.

If I may add, I feel that with time comes a little more ease in reading PA on lower time frames, an area where there is a lot of noise. Once information within that noise can be differentiated between noise and valuable information, it may be possible to get a decent number of low risk, higher probability trades as part of a daily portfolio of trades.

In saying this, I think the read on lower TFs may be done on a subconscious level. I'm assuming this based on when I take a 3+ weeks break, it takes me about the same time to actually be able to achieve the above with confidence again and I do not have a method to this (as I have for higher timeframes), but just a feel.

Anytime I take a high probability trade with a high risk ( big initial SL) I look to exit quickly EXCEPT in certain market conditions.

If you enter and it moves quickly in your direction with little adversity or no adversity then you are most likely in an ongoing high probability trade and you need to not be too greedy or profits will melt away very fast.

@volpri I'm just wondering a couple of things here:

i) Is it high risk because you have waited for PA to confirm with trend interest or was it failure to enter at the edge of the cusp extreme (distribution waning, accumulation intensifying)?

ii) Also, higher probability trades have a higher statistical follow through probability. Do you choose not to sit through and let those probabilities work themselves out over multiple legs?.

In saying this, I noted that you said little/no adversity and in that occuring, momentum does have a tendency to push fast though price, which in turn can have a jerky retrace cause by not-being-greedy traders taking profit and greedy early low probability entrants coming in and so I see your need of collecting profits.

Just curious about your thoughts on two different possibilities above.

 

[volpri]

I trade off chart patterns that form or are forming in conjunction with selling..buying pressures i see in individual bars as they formed or are forming. And I pay attention to the larger context said patterns are forming in and said buying/selling pressures are appearing in the individual bars. Usually I don't use volume too much but at times take a peak at it in exhaustion moves. Now to give a short answer to #1 above.

I know that certain patterns in certain market conditions tend to be "high risk" so I have to have a bigger SL or I will probally get stopped out before the pattern turns out to be a successful profitable pattern. Hence I place a bigger stoploss. I am confident the pattern will probally work out in the end, but i realize I may see some adversity before it does. My stoploss will reflect that posibility. BUT, if my initial risk assessment (in actual market PA action) ACTUALLY turns put to be quite abit less (i.e. No adversity or very little) then i am not going to follow this very far but will exit quickly..wait for a pb and possibly enter again IF THE PB looks like the trend may continue. I know i am speaking in very abstract terms here but will later on try to add a chart latter to illustrate. So, in short it is high risk because that particular pattern in that particular overall context requires setting a bigger SL because of POSSIBLE ADVERSITY, adversity that may or may not happen but if it does I don't want to get stopped put before the pattern becomes successful.

When actual PA proves my risk assessment is too big then i simply am not going to follow profit very far because if my reward is easy then it usually will not work out to be large even with some follow through. Of course, there are times it does but i can always enter again. And if it doesn't then I am out and have locked in a profit. Especially, in an instrument that has alot of reversion to the mean.

Will answer question 2 later also. Have to do something else right now.

 

[Alpha Trader]

I know i am speaking in very abstract terms here but will later on try to add a chart latter to illustrate.

Hey @volpri with sentiment changing by the second, being abstract is the only way that one can most precisely explain something like this. Ironic, I know, but so very true with the nature of this game. And as you have previously mentioned, there is no certainty.

The only certainty, is uncertainty.

When actual PA proves my risk assessment is too big then I simply am not going to follow profit very far because if my reward is easy then it usually will not work out to be large even with some follow through.

Hmmm. Interesting, because most times markets tend to continue their behavior and an easy reward leads to more easy rewards. Once again, please don't quote me on this as everything is so based on context, that we may be agreeing on the same thing here.

 

[volpri]

Here is a some old chart not sure how long ago is was but it is from barchart and I had it on my computer and it illustrates some of the points I made above while answering your first question. Probally not the best chart and not from my trading platform but here goes:

First the context. Price has been channeling down. That channel evolved into a sideways range (yellow lines) which is pretty normal FOR PA that is channeling. Now we know from observation that the next phase is a BO of the channel, top or bottom. It broke out of the top. Note that pressure had been building for a bull BO of the channel because we see 5 bull bars in a row from the bottom of the channel all the way to the top. As these bars were forming They told me that a BO to the topside was likely AND that it would likely be a successful BO and good for at least a point or 2 scalp..maybe 3. When the BO bar closed outside the channel and was a bullish bar I am looking at going long.

At this point I do not know that this is going to be a high probability, big risk, low reward trade. But I ASSUME it will be because the correct stoploss placement for long entry 1 is below the begining of the spike up. I don't want those darn HTF's and algos knocking me out of a trade. So my risk is big (relative to the PA in the range and the BO). So I am long at 2173 and my INITIAL SL is 2168.50 (4.5 points), in other words big risk.

I watch closely the next bar to see how my ACTUAL risk turns out. As it goes price went against me 1/4 point then continued up. This PA of a tiny low risk made this a high probability trade low reward trade. I now know I need to grab whatever the market gives me for a scalp..1 point..2 points. But I cannot expect much more. Why? Look to the left at the context. Big bear channel. This market is probally going sideways but in range expansion. That is, this BO is probally just a leg up to expand the range as the bulls are trying to reverse the bear channel. But the bears will be trying to reverse the BO too. The bulls will probally only get a larger sideways range. In fact that is what it ended up being. A bigger sideways Range. When I see little to no adversity after my entry then I know the reward won't be big given the context of the bear channel. So I gotta look to grab what I can. I probally would exit at exit 1 grab my 2 points and kiss that trade goodbye. However, I would thus end up with a good RR i.e. 8:1 ...2 points profit .25 risk. All this because my actual risk was only .25.

But, if I felt especially keen to push matters and I was quite giddy I might not exit at exit #1 but hold thru any PB and scale in on the PB or just ride it out the PB with my initial position. Notice the deep PB (relative to the PA range..etc) The PB went way back down into the range. That is precisely why this is a high risk trade of 4.5 points initial SL Those bears are gonna push hard against this BO of the yellow range. They are going to try and make the BO fail. The bears have been active all the way in that bear channel to the left. Now they want more but the bulls are pushing too. I have to be ready for a deep PB. So I add to my long in the PB (assuming I didn't get out at exit #1. My initial 4.5 SL held and price reversed back up into the expanded range giving me even more profit. so this is why this trade is a high probability, big risk, small reward trade. High probability because of the bull spike that began at the bottom of the range and leading to a BO out of the top of the range. High risk because my initial stop has to go at the bottom of the spike. Low reward because the overall context is weak. I must not follow this BO too far UNLESS PA shows me some really good strength. Which it did not.

In actuality had I traded this I would probally have exited at exit #1 captured 2 points waited for the PB. And entered again after the PB on a higher low and then exited again at exit #2 for another 3 or 4 points as price raced back up to the top of the expanded range. But even if i had held my initial position at 2173 through the pb to 2170 thus having an ACTUAL risk of 3 points i could have exited at exit #2 for a 3 point gain or nearbouts giving a RR 1:1 not too good but not a loss because my initial SL placement kept me in the trade.

Of course after that came ANOTHER short and another long opportunity as price continued ranging in the larger expanded range. Most attempts at BO of ranges fail so these last two opportunities are standard range trading..i.e. fading the attempted BO at the top and bottom. of the expanded range. (blue circles and green circles) Hope this explanations helps to clarify what I am talking about in the abstract statements above in my prev post.

 

[volpri]

@Alpha Trader

To answer your question #2. Higher probability trades don't always have good followthru. But they can. It is true that markets have inertia and tend to keep doing what they are doing. However, at least for me, the overall CONTEXT is important in my decision making as to whether or not I will follow a trade for more than one leg. In the chart i posted in my previous post the context was not such that i would want to hold through that p.b. And grab that second leg up. I would prefer to exit at exit#1 wait for the pb to end and go long again as price goes back up towards the top of the range. Why? The big bear channel to the left. The range formed at the bottom indicated to me that we had alot of bears still and bulls are pushing but it was doubtful at least to me that the B.O. would indeed have great follow thru. Of course, sometimes it does but price action will show that as time goes by.

Now if the context had been different then yes i might would hold through any Pb expecting a continuation of the B.O. EVEN though my ACTUAL risk ended up being small. That is, in some contexts holding my position is warranted. My initial assumption is to exit quickly on any small risk high probabilty trade but if i see the context is likely for another leg or two i may well hold my position or even add to it.

 

[volpri]

Here is an example of a high probability, small reward, big risk trade this morning just a few minutes ago. Likely HIGH PROBABILITY: because we have been trending down almost all night. Price trading below both MA's. Big bear bars tails on top weak PB's. Entry 2413.50. BIG RISK Proper SL has two areas. The proper one is 2422.50 way at the top or a little less at 2418.50. I assume reward will probally be little, so SMALL REWARD: little ACR (actual risk .25) after entry. This small adversity confirms my assumption of small reward. So I am looking to exit quickly on any decent profit the market gives me and not follow this too far. This could well have a second leg down but do I want to hold? Depends if I am feeling like a super dupper trader I might. But scalping is in my blood. In the 2418 to 2416 area we have overlapping bars. Bulls and bears..both pushing and fighting. It is time of day when reversals can take place. No sir ree bob. I make haste grab my three points with exit at 2410.50 wait and see if any PB ensues and watch buying/selling pressure in next few bars. I can always enter again if no reversal happens and the downward move starts back again. Alternatively, I can hold my position not exit at 2410.50 scale in with more on the PB looking for another leg down. I suppose that is just preferences. I prefer locking in profits that are decent. I consider 3 points decent. I scalp.

Here is a 5 minute chart and 2 minute to compare. As I type this I do not know what has happened afterwards as I haven't look at my platform. The move could have had a good second leg down or we could be beginning a reversal I'd say a 55% chance move down resumes and a 45% we get some sort of reversal that will start a sideways trading range. You just can't be certain. You trade what you get.

 

[nakachalet]

i'll try to post less frequently from now on.

it is rather embarrassing, but since there are so many
who are new and want to be sure that there are really live
traders around the forum, who can really trade live but
just do not wish to overly imposed on those who can trade
even with much higher profit margin and per trade but just
do not feel comfortable about showing their trading screens
which many are just like top-secret pentagon stuff, you know.

but then in my case, what you see is just one of the very
elementary trading screens among nine other supporting
screens for this particular product. i do not mind to share
it among ET traders here.

just watch and enjoy. remember none has any commercial nor
trading value of any kind. they are just for enjoyment and
entertainment at best, K?

profitable trading to you all tool.

https://www.screencast.com/t/GAJD4VrAas

 

[nakachalet]

Here is the last post for

NQ today, the first 10 min at opening.

Many avid consistently profitable traders would
have many factors to cite for a successful trade
closeout, but if someone asks me, i would venture
to say,

you just have to learn how to use the gamma knife nowdays
for any advance medical procedures and such,
anything less, just won't seem to be
adequate nor sufficient, to seek entry and exit
points in trading arena which seems to have
more inherent unknown than any other profession;

but then it is just only a one man opi,
no one should ever lean too heavily
on just one person, regardless of what he/she says, or does, or
demonstrates, or whatever; just to be on the safe side, really.

profitable and happy trading the rest of the session. chow.

 

[nakachalet]

Here is an example of a high probability, small reward, big risk trade this morning just a few minutes ago.

View attachment 175269

View attachment 175270

thx much for sharing, volpri. much appreciated.

 

[volpri]

And here is what happened.This is a dialed down 2 minute chart to see detail a little better. I trade from 5 minute chart. I will also show the 5 minute chart. It is the second chart.

I didn't trade these trades. This is for illustration of the principles only.

We did get a sideways range movement so I was correct in taking the 3 point profit in previous trade. Next we got a range expansion BO that also had (little ACR) so it was a High Prob. Big Risk ( see SL) small reward (exit #1) when I saw the ACR I knew I needed to exit quickly on any decent scalp profit or if feeling really giddy hold entry thru ensuing probable PB and scale in using alternative #2. Then exit at top of second leg. Or do alternative #3 exit at 1.75 to 2 point exit #1, lock in that profit and enter again when second leg begins. In alternative #2 and #3 notice the stop loss held. So either senario works fine. Blasted HTF and Algos!

What would I have done? Probally grabbed 1.75 to 2 pt and exited at exit #1 and entered again after PB for more profit on leg #2. Just my preference. I am a scalper.

Well I am out of here. Hope you enjoyed my BS. Time to disappear. I have no secrets...well...maybe a few...the charts are in the open for all to read..generally nothing to hide..nothing stamped "top secret". No math formulas. Just reading price action. I sometimes get it wrong like every other dipstick on here ( I am sure there are more dipsticks than me on here). But, if I can make a few dollars and have fun..why not? If I lose ...tomm is another day...and another chance.

One final thing. Scalping opportunities were presented in the range. Remember most attempts to BO of the range fail so you fade them. Sell at top..long at the bottom..eventually one BO will succeed which is the range expansion one I focused on in this chart. But there were other scalping opportunities in the range.

bye