Daytrading Without Stops

Quote from indahook:



Anyway you could post the results? Only curious because I have thought about this before. I would NEVER trade this way either but my thoughts were that you could raise the % even higher if you made it less random by only going long on up days and short on down days(regardless of the mkt`s actual strength or weakness). Could be fun to play with...
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I don't have the specific results. I know he ran the tests many times, something like 60 or 80 times (since the entry is random each one suppose to perform a different way) but the results were surprisingly consistent, around 38% if I remember correctly. One of the principles was to enter only with the trend, that might be a daily trend or a momentarily trend (I think it was 3 higher lows or 3 lower highs). It is very interesting I will try to see if I can dig more details.

TM Trader
 
I think that doing without stops is a great idea. I sincerely hope that everyone begins following this policy on Monday morning.
 
Quote from TMTrader:

I know about someone who backtested a random entry system that had a 1 pt stop-loss and 3 pt target and some other basic parameters. It had 38% success which meant it made money.

I don't know of anyone who uses such a system. I certainly would not.

TM Trader
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Over a larger dataset, the success rate of this should be 33% for breakeven, minus commisions. I've computer tested this kind of thing over huge data sets of random fluctuations. Similarily, a 2 pt target and a 1 pt stop-loss would have a success of 50% for another breakeven...and so it goes with any other ratio. At least that is the conclusion of my research of random entries in a random environment.

JohnnyK
 
Quote from JohnnyK:

Over a larger dataset, the success rate of this should be 33% for breakeven, minus commisions. I've computer tested this kind of thing over huge data sets of random fluctuations.
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Johnny, I'm sure you meant 25% and
Similarily, a 2 pt target and a 1 pt stop-loss would have a success of 50% for another breakeven...
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33%.
 
Here is a hybrid method:

Suppose you look for setups on ES where you are targetting 4 points and you would be risking 2 points. However, you don't put a hard stop in at the 2 point loss. Instead, you put in a hard stop at a 3 point loss. If you reach a 2 point loss, you get out of the position on any 1 point ES retracement in your favor or until your hard stop at a 3 point loss is hit.

The point of something like this is to take advantage of the many whipsaws in something like ES, especially when stops are triggered.

Comments?
 
Quote from Mr Subliminal:

Johnny, I'm sure you meant 25% and 33%.
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Yes, I may have. What I meant to say is that with a 2 pt target and a 1 point stop, you'ld hit twice as many stops as targets for breakeven. With a 3 pt target and a 1 pt stop, you'ld hit the stop three times as much as the target. And so it goes...

JohnnyK
 
Quote from FRuiTY PeBBLe:


Some men you just can't reach.

FRuiTY
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Can't reach me on what? That not using stop-loss is better? More profitable? Please explain to me how a system that don't use a stop-lose is profitable in the long run.


How far are you going to ride a losing trade? 8 points, 20 points, until you lose your entire account? Where is the edge without using any kind of stops? How do you handle risk/reward?


I never said that using hard stops is the only way to go, actually I move my stop-loss at times, the same way I move my targets when it is required.

TM Trader
 
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