Chronicles of an Idiot
- Thread starter VisionTrader
- Start date
Quote from jhburton:
Breakout,
Going to bombard you with questions.
No problem...happy to answer if I can.
What is you normal stop loss? 1pt.?
Just depends on the entry...usually 4 ticks, but
sometimes 3 or 5. But, I usually pass if I have to risk more than 5.
The idea is to place your stop 1 tick above/below the most recent
high/low of the Dbl bottom/Top. Below is a chart from 6-12. The 1st setup had 4 ticks risk and the 2nd setup had 3 ticks.
Do you get chop around a lot?
Not too much, you would be surprised how often 1 tick above/below the most recent high/low will hold.
If you get a signal and get stop out but the signal is still valid, do you take the trade again?
Sometimes that will happen...price will hit
your stop and then go right back to where you were. If the indicator is still showing a Div/Conv, I will usually give it one more shot.
That's just the way I was taught to trade them. I was tutored
by Mr. George Lane about 12 years ago. Some consider him to
be the authority on stochastic. I was taught to wait until price
makes a lower low or higher high. I know what you're saying, though. Just like yesterday, I missed two potential setups by
1 lousy tick. I guess I'm just a loyal disciple...hehe
I would think the divergence is much stronger if a lower low is made on price, yet a higher low on the stoch indicator. If one would study this compared to price making a traditional double low, my guess is the signal would be much more reliable for the lower low over time. May be a good way to filter the trades, problem is signals would be harder to come by.
There we go... clear as mud I think.
Thanks. Good idea. I will work on this.
I think that 71% number will be lowered as the journal grows.
The backtesting I did was around 66%. Figuring real time jitters, etc. , I am guessing this number will come in closer to the 50% like I have been advised by others more knowledgable than myself. I do have another idea which I am working on...........
My journal is titled "Chronicles of an Idiot". This is the tiltle I gave to my own personal journal which is all about me learning the great art of becoming a good trader. I like to laugh a little on the journey and not take things too seriously. But make no mistake, I am very serious about becoming a successful trader. My wife calls it a "type A personality".
I do not want to offend anyone with the word "Idiot" and it is entirely directed at me, the Head Idiot. You have heard of the "Fools", well we're the Idiots. Working on our logo, t-shirts, live appearances, etc.
This journal is a tool for me and anyone else interested in developing their trading skills. I will continue to describe my trading system here and hope to have everyone help me. Maybe those who help will learn a little something for their time also.
If you will take the time to read thru previous posts, you will understand my Trading System which is a work in progress.
I will try to post things in as real time as possible for those interested and will always try to add charts, etc to help everyone understand. I do not trade everyday. I will try to let everyone know when those days off are going to be.
As Head Idiot, I really only have one rule which needs to be followed here......same thing I tell my soccer team...
IF YOU CAN"T SAY SOMETHING POSITIVE OR CONSTRUCTIVE, PLEASE DON'T SAY ANYTHING AT ALL.
okay, enough of that. Things have been great so far and I think everyone is finding this a friendly place.
HAPPY FATHER'S DAY.
I do not want to offend anyone with the word "Idiot" and it is entirely directed at me, the Head Idiot. You have heard of the "Fools", well we're the Idiots. Working on our logo, t-shirts, live appearances, etc.
This journal is a tool for me and anyone else interested in developing their trading skills. I will continue to describe my trading system here and hope to have everyone help me. Maybe those who help will learn a little something for their time also.
If you will take the time to read thru previous posts, you will understand my Trading System which is a work in progress.
I will try to post things in as real time as possible for those interested and will always try to add charts, etc to help everyone understand. I do not trade everyday. I will try to let everyone know when those days off are going to be.
As Head Idiot, I really only have one rule which needs to be followed here......same thing I tell my soccer team...
IF YOU CAN"T SAY SOMETHING POSITIVE OR CONSTRUCTIVE, PLEASE DON'T SAY ANYTHING AT ALL.
okay, enough of that. Things have been great so far and I think everyone is finding this a friendly place.
HAPPY FATHER'S DAY.
I have 5 types of trades that I enter on a subjective basis. I nicknamed my trading system VisionTrade for no particular reason. I named the trades to make them easier for me to remember and because I am an idiot.
Here they are:
Here they are:
- VTDT - VisionTrade Double Top
- VTDB - VisionTrade Double Bottom
- TTT - Tip Top Tumbler
- BBB - Bottom Buster Breakout
- HOTT - Hop On The Trend
[/list=1]
Here the description of the HOTT trade. This has proved fairly successful. I use it with great caution. It is a very subjective entry. For the record, it is the most exhilarating one.
In a short time after starting this journal, Breakout and other more seasoned traders, brought to my attention that my risk/reward ratio needed attention. Funny, I always realized this was an issue, but never took the time to fully evaluate the alternatives. (Guess I am already getting benefit for all this posting time)
My current plan was based around the ability to catch small 2 point (8 tick) moves, my risk was also set at 2 points( 8 ticks). Using this strategy, I had to have good success numbers. Obviously greater than 50/50 . I realized this, and my backtesting of the strategy proved acceptable and I showed good profit. I think the reality is that I am not superman and over time this is going to be a problem. I have actually been trading this realtime and have had success as I mentioned.
Late last week, I began backtesting a different risk/reward strategy. I looked at 2 points risk with a 6 point reward. You all have convinced me that this makes more sense and I appreciate the awakening.
What I did was a simple change. I switched to the 3 minute chart instead of the 1 minute chart. Nothing else is different at this point. I started the backtesting going back to 2001. It was a very enlightening experience. Although my success rate dropped, I was more profitable on fewer trades. Also, my set ups had the ability to produce a 6 point profit instead of just 2 points. It was really interesting because everything was pretty much the same, except I had a better risk/reward and could stand to lose a little more. The characteristics of price movement were pretty much identical at 3 minutes and 1 minute.
Some key results to date are:
% Trades Profitable 51%
Avg Trades per week 8
Avg Ticks per week 66
This is all based on trading 1 contract.
Based on this, I am going to begin using the new 3:1 reward/risk ratio of 6 points/2 points. I am not going to trade this live for real money yet. I will continue to develop this here in the journal and post the trades real time in my journal.
One thing that I liked is that there are fewer trades. My original system averaged 17 trades per week. It should be noted that I don't take every set up.
BACKTESTING
I don't know if this is how others do it, but I am only able to back test this strategy by using my TradeStation historical data and scrolling to the "right edge" to simulate real time. Since this is subjective, it can't be done using an automated backtest in easy language as far a I can tell. If there is a better way, I am all ears. I usually like to discount the backtested results because it is definitely easier to do this way than when the real time chart is ticking.
Also, I want to point out that many times using this new set up I could have easily moved my stop to breakeven. I did not. The result were either success (6 pts) or failure (-2 pts).
Also, I have only been able to back test about 4 months of data so far, I will continue and I will update the numbers. I realize I need more data tested. Things were just so similar, I have decided to begin formally testing it. Let's see how it works out here in the journal.
My current plan was based around the ability to catch small 2 point (8 tick) moves, my risk was also set at 2 points( 8 ticks). Using this strategy, I had to have good success numbers. Obviously greater than 50/50 . I realized this, and my backtesting of the strategy proved acceptable and I showed good profit. I think the reality is that I am not superman and over time this is going to be a problem. I have actually been trading this realtime and have had success as I mentioned.
Late last week, I began backtesting a different risk/reward strategy. I looked at 2 points risk with a 6 point reward. You all have convinced me that this makes more sense and I appreciate the awakening.
What I did was a simple change. I switched to the 3 minute chart instead of the 1 minute chart. Nothing else is different at this point. I started the backtesting going back to 2001. It was a very enlightening experience. Although my success rate dropped, I was more profitable on fewer trades. Also, my set ups had the ability to produce a 6 point profit instead of just 2 points. It was really interesting because everything was pretty much the same, except I had a better risk/reward and could stand to lose a little more. The characteristics of price movement were pretty much identical at 3 minutes and 1 minute.
Some key results to date are:
% Trades Profitable 51%
Avg Trades per week 8
Avg Ticks per week 66
This is all based on trading 1 contract.
Based on this, I am going to begin using the new 3:1 reward/risk ratio of 6 points/2 points. I am not going to trade this live for real money yet. I will continue to develop this here in the journal and post the trades real time in my journal.
One thing that I liked is that there are fewer trades. My original system averaged 17 trades per week. It should be noted that I don't take every set up.
BACKTESTING
I don't know if this is how others do it, but I am only able to back test this strategy by using my TradeStation historical data and scrolling to the "right edge" to simulate real time. Since this is subjective, it can't be done using an automated backtest in easy language as far a I can tell. If there is a better way, I am all ears. I usually like to discount the backtested results because it is definitely easier to do this way than when the real time chart is ticking.
Also, I want to point out that many times using this new set up I could have easily moved my stop to breakeven. I did not. The result were either success (6 pts) or failure (-2 pts).
Also, I have only been able to back test about 4 months of data so far, I will continue and I will update the numbers. I realize I need more data tested. Things were just so similar, I have decided to begin formally testing it. Let's see how it works out here in the journal.