Frequent small profits, rare large losses...

[ironchef]

Hmmmm, this style makes no sense to me, Scalping and some day trading is risking greater than reward, but my testing show anything you keep overnight is long term ruin of accounts, unless you constantly hedge with options can help but sometimes that is not an answer either. I think it is back to drawing board.

They can close your position when the after hour trades hit your stop? No wonder one expert day trader told me to ALWAYS close all the positions before the market closed?

 

[FreakofNature]

OP,

Most newbies follow this route, dont be one.

 

[Handle123]

Losses were x20 larger than the profits when they happened. I set my stops far away to survive volatility.

This is totally insane, you are not even considered gambling, this is called wanting to lose all you have a more, cause when not if, you trading anything leveraged and gaps over your stops, it will be even more. This first time I have ever heard of using this percentage of loss other than not using a stop. No trade is worth being in with this much risk.

 

[d08]

I have been using the lowest leverage possible. Reducing tail risk has been my biggest headache.

There's no magic answer, pretty much all high win rate approaches have this problem - this is why most don't trade these. Better to have a 60% WR and very concentrated distribution.

 

[d08]

They can close your position when the after hour trades hit your stop? No wonder one expert day trader told me to ALWAYS close all the positions before the market closed?

The common idea is that overnight brings huge risk but I haven't actually seen this in data, there are equally big moves intraday.

 

[nonlinear5]

No position sizing or position hedging will save the trading strategy that has no edge. If your win rate is 90%, but average loser is 20 times larger than the average winner, you have a negative mathematical expectation. That is, your strategy is (much) worse than a coin toss. I would suggest going back to the drawing board.

 

[JackRab]

Seems like you just put your stoploss to far away. Or double down indeed... and going bust on a longer move in the wrong direction.

So you take a quick profit which is always smaller, and when the trade goes wrong you either double positions or try to ride it out and try to cover at no loss?

There are not that many black swans, so that can't be it....

 

[prc117f]

I have been using the lowest leverage possible. Reducing tail risk has been my biggest headache.

I dont get it? You can reduce tail risk by going long an option that puts a floor on your max risk.

 

[JackRab]

I dont get it? You can reduce tail risk by going long an option that puts a floor on your max risk.

Doesn't work if OP is doing lots of small trades and hangs on to the wrong one... costs will rise massively.

Unless... he might be able to buy an option or strangle at beginning of the day to cover a move beyond his daily range...

 

[nxt7]

Question to all the newbie :

90% winners but with x20 larger loss is a NO GO strategy.

However, even you do the opposite way of trade (10% winner but with x20 profit in the winner), you STILL LOSS in the real world, do you know why ?

The broker or bucket shop owners will not like the answer as all their most valuable customer - day traders (aka day dreamers) will run away if they know this answer.

I want to know the answer. Feel free to PM me if you dont want to post here.