Nothing can be gained arguing this point. We both may quote some successful trader for support.
I trade 1 ES
- Thread starter random trader
- Start date
Nothing can be gained arguing this point. We both may quote some successful trader for support.
In your case, a "good trade" makes you $250. So if we assume that every "missed" trade would have been a good trade, you would have to have 4 "missed" trades, all of which would have been good trades, to equal just one bad trade.
The problem is why are we assuming that a "missed" trade is always a good trade?
Tell you what: in my 30+ years of trading, I have mostly used limit orders enter positions. So I've "missed" many trades at the time. Some of those would have been "good" trades. But there are some trades that I "missed", that I then cancelled the trade, and later had an opportunity to make the trade at an even better price than I had intended. Sometimes I haven't wanted to make the trade by that time, having had an opportunity to reconsider.
Since you're a statistical expert, I would assume that you don't make these types of statements lightly, that you must have some study that covers your missed trades versus bad trades. So why not just trot out the study that shows all of the missed trades versus all the bad trades?
But most people I know talk about the one that "got away". They don't talk about the time it worked in their favor. Either way, any evidence that your statement is true would be strictly annecdotal since it's nearly impossible to study the trades that you "missed".
What I would imagine is being talked about in Market Wizards is a guy who strictly limits his losses, and lets his profits run, and therefore, if he "misses" a trade, and then sits there like a wooden indian, refusing to make another trade later on because he could not make it at the original level, and simply watches as this trade becomes the winner of all time, that this trade then would outweigh all of those little losses he took.
The difference is, your strategy limits your gains, to 1/4 of your losses, so again, you need to miss 4X as many trades as all of your losers to make this claim. I find that to be unlikely.
OldTrader
No argument, everything you said is right. The problem is misunderstanding. You may not see clearly what I am trying to do here. Though I trade only 1 contract, I am working with two timeframes, weekly and daily. I actually have a sell and hold short position on the weekly (from the bias) and attempt to jump in and out of a long position on the daily to beat sell and hold.
If I miss a trade on the daily, it's only a few points. If I miss a trade on the weekly, it's much more than that because I WILL turn into a woonden indian.
I don't know if this is going to work out. If I know, it will not be called an experiment. I said repeatedly I am not a good trader; I was just interested in finding the answers to a few questions.
6 point range (988-994) overnight. volatility is back. Feeling is I will make some trades today.
Waiting for home sales data.
No big reaction to the data.
Old Trader - Random has already reported that he is "not a good trader" and he obviously doesn't consider the many suggestions that have been put before him to be of value. (Nobody "understands".) So let's talk between ourselves for a moment.
Of all the reasons why this plan/strategy/system/scheme won't work at any level that would produce even a modest return, is because it is clearly a terrible use of trading capital. The "highest-and-best-use" of capital is a very important concept, and one that is easily forgotten in these "tests", paper trading, backtesting, etc.
In the case of Random's scheme, a 30-40 point spread between profit target and stop loss virtually guarantees that a trader would often be tying up capital for days, sometimes weeks, while awaiting a very modest gain. If one were to raise the stakes with more contracts, then the account would be put into severe risk of total loss during the period of the trade. This is a characteristic of many such schemes that are fun to play with, but that have little or no application in reality, assuming that one is in the business of trading in order to make money.
In fact, I would venture a guess that nearly any strategy can be improved in backtesting, or on paper, with a wide stop loss, or the complete elimination of a stop. But in reality, such systems are usually untradeable because capital is tied up waiting for positions to move.
You can keep the discussion going. I don't mind as long as harassment is not present.
Bear in mind I am in the middle of some experiment. I am not supposed to change the parameters when it's ongoing. Nevertheless, suggestions are not ignored; I have taken notes of many things from this thread.
I have to disagree tying up capital is a problem. I am not trying to daytrade, so by definition, my funds will either be tied up in positions, or sitting as cah earning minimal interest. And if the sum of modest gains over a year beat both SPX and money market fund, what's wrong with that? After all, this is the no greed experiment.
7 point range (987-994) day. Volatility appeared overnight but quickly faded away after NY opening. Didn't find any opportunity to trade today. My feeling in the morning was wrong again. A few more bad guesses like that and someone should be able to fade my predictions and make money.
8/25/03 Day 6
Bias: down
Position: open from 990 on 8/15/03
P/L: -4 points
Sell and hold P/L: -4 points
No fear, no greed, lots of patience
Bias: down
Position: open from 990 on 8/15/03
P/L: -4 points
Sell and hold P/L: -4 points
No fear, no greed, lots of patience