"Five to One" - Doors
- Thread starter tom_p
- Start date
Tony,
I'm currently slogging my way through both Mark Douglas books. I'm not familiar with your style and didn't claim to simulate it, as I didn't claim to simulate Hitman's style. Your book is next on my list
wan2BTrader,
Breakeven actually is 0.54. I don't understand your question.
Tony,
I'll address your second post tomorrow - I'm going to bed.
Hitman( + Tony),
Please guys, this is not what I originally intended. I'll kill the thread if this bickering continues. Now Hitman (and Tony in 3 hours time) - it's bedtime.
I'm currently slogging my way through both Mark Douglas books. I'm not familiar with your style and didn't claim to simulate it, as I didn't claim to simulate Hitman's style. Your book is next on my list
wan2BTrader,
Breakeven actually is 0.54. I don't understand your question.
Tony,
I'll address your second post tomorrow - I'm going to bed.
Hitman( + Tony),
Please guys, this is not what I originally intended. I'll kill the thread if this bickering continues. Now Hitman (and Tony in 3 hours time) - it's bedtime.
Don't get me wrong, I have ALWAYS respected Tony as a trader AND a person, I was just trying to prove a point and I can get very intense about it.
Tony:
I totally agree I should be more selective, as soon as I put some black ink on the sheet I have to work toward reducing the number of my shots. It is just plain impossible to move say 5000 shares the way I am doing it right now . . .
BTW:
Plain amazing how you managed to trade 10K positions regularly while generating a smaller commission bill than I did in 2001, when my average position size was like what, 600 shares?
I have definitely got too much prop firm stuff in me as I have been taught from day one this is the way to go, but what you said makes too much sense and I will experiment with it for sure if I can get a little winning streak going . . .
Tony:
I totally agree I should be more selective, as soon as I put some black ink on the sheet I have to work toward reducing the number of my shots. It is just plain impossible to move say 5000 shares the way I am doing it right now . . .
BTW:
Plain amazing how you managed to trade 10K positions regularly while generating a smaller commission bill than I did in 2001, when my average position size was like what, 600 shares?
I have definitely got too much prop firm stuff in me as I have been taught from day one this is the way to go, but what you said makes too much sense and I will experiment with it for sure if I can get a little winning streak going . . .
Tom_p:
You are right, I read your post again, I misunderstood your eq. My appologies.
You are right, I read your post again, I misunderstood your eq. My appologies.
You guys make things so complex. I follow a tread like this and I end up getting my calculator out.
I may sound like a simple fool but if your profit/loss is always greater or the same as 2/1 no mater what time frame you trade and you trade using low commissions such as IB why complicate thing with all sorts of ratios and calculations.
I may sound like a simple fool but if your profit/loss is always greater or the same as 2/1 no mater what time frame you trade and you trade using low commissions such as IB why complicate thing with all sorts of ratios and calculations.
Tony,
<< And one more thing, why is the commission rate for trader II higher than trader I by 50%? Isn't it possible that trader II pays less than trader I per trade? Flip those numbers around and see what you get >>
Yes, it's possible - however my scenario is the more likely commission structure ratio, unless you're Tony Oz ($10 per 10,000!!!)
<< And isn't it possible that trader 1 will bat 490 and pay 100K in commission that year and end up out of the game. I don't see how that probability does not come up? I mean being 49% right and losing money is possible. >>
Everything's possible. My table only goes to 0.51 - I could have extended it to 0.49, or to 0.29 for that matter - what would have been the point?
<< Flaws in probabilities calculations
You say: "For total commissions to equal total net profits, the following equation must hold true : ...."
The flaw of your calculation is that it computes profit to commissions ratio rather than profit to shares traded per year minus commissions. Then use percentage of time being right say 49% or 48% yet trading millions of shares a year ... >>
I am using "percentage of time being right" - I used the equation to obtain an initial value of p around which I could work. If my calculation is flawed and p is not 0.58, then how would you calculate it? A suggestion to read Chapter 26 of your book will not be accepted - I plan on doing that anyway
<< Remeber my post had to do with how I define a good active trader. "My definition of a good active trader (over 20 round trip trades a month) is someone who is profitable and has earnings to commission ratio greater than 5" >>
Then my "trader 5:1" at her higher levels fits into your definition.
<< Read the quote again, "The one with the 5 to 1 is simply more selective than the one with one to one!" >>
As I stated, this whole exercise was nothing more than an attempt on my part to concretize the characteristics of 2 different trading styles out of the infinite number that exist, as an additional reinforcement to my beliefs about accepting risk.
<< Why? Because I know of 2-Mil-a-year traders who blew out in their first down year because their ratio was less than one to one! ... >>
Talking about accepting risk, is that your final answer? Was that their final answer? Did they just keep trading the same losing style, day after day, month after month, for a year without getting smaller and/or making any attempt to re-evaluate their strategy and/or taking a vacation, then wake up on December 31st and say to themselves "Hello, hello, hello - what have we here? I blew my account 'cos my 1:1 trading style didn't work this year!!!" You and I both know why they blew out.
<< And one more thing, why is the commission rate for trader II higher than trader I by 50%? Isn't it possible that trader II pays less than trader I per trade? Flip those numbers around and see what you get >>
Yes, it's possible - however my scenario is the more likely commission structure ratio, unless you're Tony Oz ($10 per 10,000!!!)
<< And isn't it possible that trader 1 will bat 490 and pay 100K in commission that year and end up out of the game. I don't see how that probability does not come up? I mean being 49% right and losing money is possible. >>
Everything's possible. My table only goes to 0.51 - I could have extended it to 0.49, or to 0.29 for that matter - what would have been the point?
<< Flaws in probabilities calculations
You say: "For total commissions to equal total net profits, the following equation must hold true : ...."
The flaw of your calculation is that it computes profit to commissions ratio rather than profit to shares traded per year minus commissions. Then use percentage of time being right say 49% or 48% yet trading millions of shares a year ... >>
I am using "percentage of time being right" - I used the equation to obtain an initial value of p around which I could work. If my calculation is flawed and p is not 0.58, then how would you calculate it? A suggestion to read Chapter 26 of your book will not be accepted - I plan on doing that anyway
<< Remeber my post had to do with how I define a good active trader. "My definition of a good active trader (over 20 round trip trades a month) is someone who is profitable and has earnings to commission ratio greater than 5" >>
Then my "trader 5:1" at her higher levels fits into your definition.
<< Read the quote again, "The one with the 5 to 1 is simply more selective than the one with one to one!" >>
As I stated, this whole exercise was nothing more than an attempt on my part to concretize the characteristics of 2 different trading styles out of the infinite number that exist, as an additional reinforcement to my beliefs about accepting risk.
<< Why? Because I know of 2-Mil-a-year traders who blew out in their first down year because their ratio was less than one to one! ... >>
Talking about accepting risk, is that your final answer? Was that their final answer? Did they just keep trading the same losing style, day after day, month after month, for a year without getting smaller and/or making any attempt to re-evaluate their strategy and/or taking a vacation, then wake up on December 31st and say to themselves "Hello, hello, hello - what have we here? I blew my account 'cos my 1:1 trading style didn't work this year!!!" You and I both know why they blew out.