ES Journal Archive (2006 - 2008)

Status
Not open for further replies.
porgie, it`s not a problem with a system it`s a problem with more or less random marketnoise, the less volume in the market, the more the chop and spikes, the more the "Big Boys" are playing stopfishing, that`s the reason too why breakouts over HOD/LOD in Lunchhour are rarely meaningful. In a nice market with nice swings and lot of volume and low noise, of course very small stops are working pretty fine.

I remember one loss in DAX in a flat slow market with low volume, i had a reasonable stop ~12 points, there occured a ligthning fast candle down to my stop going up again immediately to the price before, didn`t look at T&S (or had no at this time..) I guess i was the only idiot getting hit by this. If liquity and volume is going down and /or trading in low volume times of day you are in danger with small stops, facing low profit probabilities at the same time. Of course best is to avoid such an environment at all....
 
and you may know it after 2-3 losses, uuuh choppy today..., nobody tells you in advance that this will be a choppy/spiky day, you see it after the fact.
 
Quote from mechtrader41:

That`s splitting hairs talking about a few points more or less, that was a period of very high vola and indexlevel reducing 2 points to a meaningless nothing...

On 4/04/2000 the low of SPX was 1416.41, the high was 1526.45, makes 110 points

On 4/14/2000 the low of SPX was 1339.4, the high was 1440.51, makes 100.6 points

And the averagetruerange(20) peaked up to a 39 points level

That are index data from yahoo finance...

Even if ranging only in a 20-30 points/average(seen 2002) a 2 point stop has a different meaning as in a 9-10 point environment like today...

And if we go back to even lower Volatility like in the mid 90`s, 2 points may be a little bit to large again...

So what is wrong in my arguments?
More...

Don't thrust Yahoo for correct data. I have completely different data, don't know anymore where i got it, but for years now i get my data from Esignal. Much more accurate than Yahoo.
I trade for years with a 2 points stop. I seldom got stopped out, so apparently i don't have problems with higher volatility. High volatility mostly creates problems if you are trading AGAINST the trend. If you trade WITH the trend you will see that the big moves go in the direction of the trend. Maybe know you will understand why trading WIth the trend is so important.
 
Quote from mechtrader41:



I remember one loss in DAX in a flat slow market with low volume, i had a reasonable stop ~12 points, there occured a ligthning fast candle down to my stop going up again immediately to the price before, didn`t look at T&S (or had no at this time..) I guess i was the only idiot getting hit by this. If liquity and volume is going down and /or trading in low volume times of day you are in danger with small stops, facing low profit probabilities at the same time. Of course best is to avoid such an environment at all....
More...

That's what would happen a lot to a trader that does not know WHERE to enter into a trade. And based on above paragraph, it's clear now why small size stops would not work in your case. You can have a great system, based on chart analyses, but what about price action?
 
Quote from mechtrader41:

The time I entered market looked good, but went flat soon....
More...

Know the behaviour patterns of the instrument you are trading, why do you think some of us EXCLUSIVELY trade just one instrument? It does happen though, that's why small size stop is in place.
 
If you refer to trade only "good" priceaction, you are facing some probs, sometimes the market dries out soon after some nice move/volume. Next how do you objectively define "good" priceaction, from what level of movement/volume does it begin or end? It`s a matter of your daily motivation, how much hours sleep, amount of caffeinlevel, may be you had some emotional stuff with your girl, level of agressivity or whatever. And yes I´m not in the situation beeing day after day completely relaxed, concentrated, objectiv, in a good mood, not having a hangover from tonight or whatever leading to distorted perceptions, so I can not rely on my sight of market day after day, hour after hour, minute for minute. But I can do fine work between when I´m powerful in ideas and testing strats or doing stats about marketaction. So I build my basics before and act after it, no matter if tired or sad or stressed or whatever. If you are every day on peak performance level with cristal clear perception, you have my very deep respect! Really! Not joking.
 
mmmmmhh, By looking this thread i find this here....

...it depends on the setup

many of my setups are vigorously backtested, so i have no problem risking (for example) 21 pts to get a 78% chance of winning 14 pts

now, that is an unacceptable risk/reward ratio by some reckonings, but ... do the math

risk/reward only makes sense if computed in regards to the probability of that positive outcome
...
 
No word about small stops, if translating this in my world, if I´m looking for 5-8 points ES for the day I can(and should..)use a stop of 5-10 points if tested with good probabilty, if you are pointing for 1.5 points ES you have to use a 2 point ES stop, I see some limitations in the math cause the higher Noiselevel in very short timeframes, but that`s all I said, there is NO optimal stopsize, depends on Strat. so where is controversy all about ?

I wish a good and successful trading week.
 
Status
Not open for further replies.
Back
Top