ES Journal Archive (2006 - 2008)

Status
Not open for further replies.
Quote from Buy1Sell2:

Quick exercise: What percentage of winners do you need to have with a 3 to 1 system and a 4 to 1 system to be profitable?Let's assume for the example a commission of $25 (.5 pt) round turn. For the example, let's use 6 pt target and 2 pt loss on the 3 to 1 and 8 pt target with 2 pt stop on the 4 to 1.
More...

6X($50) - ($50)*2(1-X) -$25 = 0
$300X -$100 -$100X - $25 = 0
$400X - $125 = 0
X = $125/$400
X = .3125

8X($50) - ($50)*2(1-X) - $25 = 0
$400x - $100 +$100X - $25 = 0
$500X = $125
X = $125/$500
X = .25

So, breakeven for a 3X system is 31.25% winners. Breakeven for a 4X is 25%.
 
Quote from wareco:

6X($50) - ($50)*2(1-X) -$25 = 0
$300X -$100 -$100X - $25 = 0
$400X - $125 = 0
X = $125/$400
x = .3125

8X($50) - ($50)*2(1-X) - $25 = 0
$400x - $100 +$100X - $25 = 0
$500X = $125
X = $125/$00
X = .25

So, breakeven for a 3X system is 31.25% winners. Breakeven even for a 4X is 25%.
More...

That is correct. Thank you very much.

Now, how about 1 to 1?--anybody
 
Not taking a short for overnight there M4?

If you only trade some of the signals, you are lowering the odds of being profitable, that's pretty much a fact.

Good luck.
 
B1S2,

Thanks. I understand what you mean. Have given it a bit more thought and decide that I should not play with it intraday unless I believe that day is going to be a trend day (if its not a trend day, more often than not one is going to lose--at least from my experience). I may then choose to either a) buy a put and leave my long stock position open or b) close my long stock in the hopes of reentering it again at a better price.

As for keeping my long position and adding to my short positions (as per your suggestion), its supposedly illegal to long and short the same stocks at the same time. Of course, 1 can try to circumvent by opening up accounts with different brokers etc---, however one runs the risk of being caught. :(



I do have another question.
You mentioned in a previous post ie :
Quote from Buy1Sell2:
'In addition, I am ending my 3 year experiment with two accounts. It has served well, and has helped me stay in trades, but I think has decreased my overall returns. I am good enough at trading directiionally that I don't need that feature. I am continuing my out of the money call selling as an income producing hedge. Research on my portfolio over the last 5 yrs shows that this is more profitable than the two account futures hedge. Lots of changes today--an old dog can learn new tricks! All positions in second account have been closed at 1295.75 today. '

--may I ask what was the experiment about? TIA


Quote from Buy1Sell2:

The bottom line is that the shorter term signal must be very obvious in order for you to buck the daily and weekly. All profits are taken off of the daily and weekly trade and you are then putting on a short term trade and the exit to get you back into you initial trade must be on that short term chart etc. You run the risk when trading around a position that you will lose money on the trade around. (That's what you are doing essentially is putting on a short term trade). The other option is to leave your initial position there and add positions for the short term trades. Always keeping within your risk parameters of 2 percent of total liquid net worth. By the way, you should always count unrealized profit when doing the 2 percent calculation. That's not house money, that's yours.
More...
 
Quote from billp:

B1S2,

Thanks. I understand what you mean. Have given it a bit more thought and decide that I should not play with it intraday unless I believe that day is going to be a trend day (if its not a trend day, more often than not one is going to lose--at least from my experience). I may then choose to either a) buy a put and leave my long stock position open or b) close my long stock in the hopes of reentering it again at a better price.

As for keeping my long position and adding to my short positions (as per your suggestion), its supposedly illegal to long and short the same stocks at the same time. Of course, 1 can try to circumvent by opening up accounts with different brokers etc---, however one runs the risk of being caught. :(



I do have another question.
You mentioned in a previous post ie :
Quote from Buy1Sell2:
'In addition, I am ending my 3 year experiment with two accounts. It has served well, and has helped me stay in trades, but I think has decreased my overall returns. I am good enough at trading directiionally that I don't need that feature. I am continuing my out of the money call selling as an income producing hedge. Research on my portfolio over the last 5 yrs shows that this is more profitable than the two account futures hedge. Lots of changes today--an old dog can learn new tricks! All positions in second account have been closed at 1295.75 today. '

--may I ask what was the experiment about? TIA
More...

Sure. I was experimenting with keeping a short term account and a long term account so I could go long for one time frame and short for the other. It was done as a hedge and although I made money , it choked the profits in my view. By the way, what I meant with the adding shorts would be a net position of shorting, You would have sold your longs with part of your sale. The idea that I was mentioning was to trade two different time frames if you felt the need to, but letting the trade run within that smaller time frame.
 
Quote from Buy1Sell2:

That is correct. Thank you very much.

Now, how about 1 to 1?--anybody
More...

Just to revisit this point from yesterday- A 3 to 1 win system with the parameters I described is profitable with a 31 % system, a 4 to 1 system is profitable at 25% winners and adding today--a 1 to 1 Reward/Risk needs to have over 62% winners to be profitable. 62%!!!!.

Obviously, if you were to carry this out to 5/1 etc you would see the benefit of finding a system that lets trades ride even though you might get stopped out a lot. Food for thought--comments welcome. :)
 
Status
Not open for further replies.
Back
Top