From Micros to Millions: 2% per day
- Thread starter sstheo
- Start date
The ratio, 10 points stop versus net profit, is very bad. If you get stopped you lose $50,74. You need 7.6 consecutive (100% winning trades!) winning trades to recover from 1 stoploss trade. ($7.41 – 0.74 commission). At the average profit per trade (as you will have probably 80% winning trades, not 100%) you even need 18 trades t orecover. That’s lethal for trading, even with a +80% winning rate. You are lucky that your 10 points stop is never hit.
The ratio, average loss versus net profit, is also very bad. You lose on average $27,74 ($27 + 0.74 commission). You win on average $6.62 ($7.41-0.74 commission). You need 4.2 consecutive (100% winning trades!) winning trades to recover from 1 average losing trade. That’s bad for trading, even with a +80% winning rate.
We are in a very volatile market for months now with moves that go between 5 and 100 points. Yet you are not able to catch any of these moves, even not 20% of a move. What will you do if the markets return to less volatile moves as in the past years? You should try to catch bigger moves, that’s the first priority. If you lose 1 tick, you lose 45% of all your profits. That shows how fragile your strategy is. One bad fill (entry or exit) will cut your profit by 45%.If both fills are bad, you make no profit anymore.
That’s the main problem.
He's not lucky....he's good. He gets out most times without hitting that "emergency stop". Every system whether manual or automated should have this kind of stop for cases of news events.
No it isn't...he just needs to work on reducing those transactions costs. A lease on the CME would go a long way in that regard....once he ramps-up to multiple symbols.
On this point, I totally agree with you. However, keep in mind that "catching larger moves" moves him into the realm of intraday swing trading which has a much lower win rate. It's a whole different ball game for sure. I'm not saying he can't do it, but more importantly...does he want to do that ?
IMHO he must change his system to be able to also work in lower volatility market conditions. I think this will require two things:
1) diversification using multiple symbols (ES, NQ, RTY, CL)
2) incorporate a bet-sizing algorithm into his trading.
Right now, he would be "killing it" with 1 ES and 1 NQ.
When VIX drops, he may be looking at a lot size of 5 of the big boys to get above his daily profit target.
A more important issue than anything else: can he handle scalping multiple symbols manually without automation ? On that one, I am skeptical.
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He needs 4.2 consecutive winning trades to recover from 1 average losing trade.
You call that good??? 4.2 times more risk than reward?
If you have to take a 10 points stop to catch 0.55points profit that is not proof of being good.
The fact that lowering the stop would lower his profits, confirms that the timing for entering is very bad. He goes apparently wrong for close to 10 points after entering. He is not good.
I think the possibility that he would get killed is far bigger than the possibility that he would be killing it.
He'll also need consider slippage and other uncontrollable events(like lose eletricity, broker lag , lack of liquidity etc) too, He will not be able to pay for a loser in these cercumstance. I read over his previous thread, I think he used to be a daytrader making couple trades a day, wonder why a shfit into scalper.
He is really trading so slippage and other uncontrollable events (that happened during that period) are included.
Below is the situation based on the result that were last posted.
For various levels of winning and losing trades you can see the result. Result is $ per Emicro traded. Blue cell is his actual situation. Red zone is net losses, green zone is net profits.
If we now change the winning rate from 88.67% to his LT average 80% winning trades, the result changes dramatically. The chart colors red for the biggest part.
There is still a lot of room for improvement, and the strategy is continuously balancing on the zero profit line. Mostly in the red zone under the zero line.
PS: reducing commission will never bring the same profit as trying to catch 1 tick more in each trade. 1 ticks MES is $1.25, which is more than the entire commission.
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you had 44 posts yesterday - get a life - you are looking like a cyber stalker -
I get the AMP report late each night:
Spreadsheet updated:
Wow, all you guys are really working over my stats! Impressive. @virtusa ,you have an awesome table there!
Indeed, preventing catastrophic downside losses is vital to the longevity of my system. Along with that, I definitely do need to increase the size of my winners to increase the viability.
I propose that with a continued high win rate and slightly increasing the size of my winners, my inverted R:R ratio just might be okay.
Some things in trading seem downright religious. So here we go with religion! 90%+ of traders lose money. Big number! Therefore, would you simply consider the idea that the mandatory "1:2 Risk:Reward" doctrine among traders everywhere might not actually be the key required for eternal salvation? Is it possible that St. Peter just might let me in with an inverted R:R ratio?
For your viewing pleasure....
Spreadsheet updated:
Wow, all you guys are really working over my stats! Impressive. @virtusa ,you have an awesome table there!
Indeed, preventing catastrophic downside losses is vital to the longevity of my system. Along with that, I definitely do need to increase the size of my winners to increase the viability.
I propose that with a continued high win rate and slightly increasing the size of my winners, my inverted R:R ratio just might be okay.
Some things in trading seem downright religious. So here we go with religion! 90%+ of traders lose money. Big number! Therefore, would you simply consider the idea that the mandatory "1:2 Risk:Reward" doctrine among traders everywhere might not actually be the key required for eternal salvation? Is it possible that St. Peter just might let me in with an inverted R:R ratio?
For your viewing pleasure....
I don't think can happen with such a short time-in-trade...unless there is an unexpected news event....for which you have a disaster stop in place.
BTW: What is your ATT (Average Time in Trade) ?
You've got to be careful with this as you will find that by increasing your profit "reach" or target, your winning rate will come down. There is definitely a balance here....and you must find the optimum.