if one can predict market daily movement 55% correctly, how to profit from it ?

[Scataphagos]

Quote from d08:

So it's okay if you had all the winners inside a 2 year period but your sample size is 10 years? A system that returns 200% in 2008 but 5% in the previous 3 years is not a good one, whatever the win ratio or average return says.

"Win ratio" knows no calendar. If your win ratio is 55% but your annual return is only 5%, your method needs work.

Seems everyone wants to be "consistent"... however one wants to define it.

But just as in business where "80% of profits come from 20% of customers"... trading is like that.. where 80% of profits come from 20% of trades.

Trading is more like hitting in baseball... You'd LIKE to get a hit every game, sometimes more than one... but you're more likely to have a stretch where you go 15/30, then later go 0-25. Yet in each at bat, you're trying to do the same thing... get the bat on the ball and hope it finds a hole.

Personally, I don't bother with the notion of "consistency"... seems irrelevant.

 

[Hydroblunt]

Quote from Scataphagos:

I was talking about "Joe one-lot" doing his discretionary trade struggle... not the automated algo and HFT ETers.

Even for "Joe one-lot" commissions & spreads are a factor and costs that should be controlled. Back when scalping stocks was manual, a $0.001/share difference in your commission could be a the difference between a profitable and non-profitable trader.

 

[Scataphagos]

Quote from Hydroblunt:

Even for "Joe one-lot" commissions & spreads are a factor and costs that should be controlled. Back when scalping stocks was manual, a $0.001/share difference in your commission could be a the difference between a profitable and non-profitable trader.

An example of "fishing in a dry hole"... if such a small amount makes a big diff in your P/L, you're trying to play too hard of a game.

Tic-to-tic, nearly all movement is just noise... hard to know which tic to play. That's not the case with "some" prices.

 

[JoePaterno]

Quote from cooolweb:


strategies i trade have a 80% win ratio on paper, 50% in reality 1:30 risk reward ratio.

first, I seriously doubt this is true, unless you allow horrendous risk

second, I'll accept you pretty much trade on paper, as it constantly shows

third, newbies focus on "winning %" while traders focus on expectancy/profit factor. what the hell is a 1:30 risk/reward ratio. You mean you scalp for 1 tick profits for each 30 tick reward? Then is is also likely you personally lose at least 30 trades for each winner.

And as said above, after trading costs, you are dreaming

 

[killthesunshine]

Quote from stock777:

Suggest you try to pick 90% losers. Many can and do.

Then flip your trade.

No need to thank me.

lol

 

[Scataphagos]

Quote from JoePaterno:

"... And as said above, after trading costs, you are dreaming

Of course. Realistically, the most one can expect is a win ratio of 52-55%. Superman Trader might be 60%, be he's rare as hen's teeth.

IF there were such a thing as an "80% win play" on day-to-day trades, wouldn't the trading big-brains be all over it? There has be be disagreement/uncertainty as to what is right for there to be both buyers and sellers at all prices. If something were an "80% lock", nobody would want to take the other side.... so there would be no trade.

An anecdote...

Years ago I ran a mutual fund timing service for clients... a "fish of some size in a small pond". For one particular stretch of 5 years, I was running 70% winning trades. At the end of that time, a client called me in July and noted "we haven't had a losing trade all year". I said, "Oops, probably jinxed us".... Well, the next trade was a loser, and never had such a winning streak again. (Have had bigger years since, but not with "no losing trades through July").

Then again... I recorded one year of >100% gains in mutual fund trading where I was "in the market" only 23% of market days... and that was before there was such a thing as "leveraged" or "inverse" funds.

 

[Hydroblunt]

Quote from Scataphagos:

An example of "fishing in a dry hole"... if such a small amount makes a big diff in your P/L, you're trying to play too hard of a game.

I don't think you really know what you're talking about. $0.001/share is not a small amount if it takes your rate from $0.005 to $0.004. That's a 20% reduction. I mention this example to illustrate a point.

You're trying to make what I sense is a valid point but you do not fully understand all the issues. Many profitable strategies depend on controlling execution costs. If at the end of the day, Joe Shmoe daytrader is gross positive but is net negative, the problem may be in high commissions. To ignore commissions and even the spread is just plain silly. It's like ignoring operating expenses when running a real business.

 

[Scataphagos]

Quote from Hydroblunt:

I don't think you really know what you're talking about.

You should know better than to say that to me. I can recall a couple of times I've been in error on ET posts, but this isn't one of them.

Come on... we're not talking about "fraction-of-penny scalping" for most discretionary traders.

I understand how "every fraction of a cent matters" to an HFT firm trading 80 Million shares per day.... who on ET is doing that? Even if there are one or two, I wasn't addressing them or their style.

If you're a "discretionary trade scalper"... trying to "risk 1-tic to make 2", you're playing too hard of a game. Odds are better at "risking a couple of points to try to make 10"....(not "tics", "points") and in this case, a penny here-or-there, or $.50/contract isn't going to have all that much of an impact on the bottom line.... more important to "generally get the trade right", than the piss-n-moan over .01 slippage in the fill, or 50 cents commission diff. Sheesh!!

 

[Hydroblunt]

Quote from Scataphagos:

You should know better than to say that to me. I can recall a couple of times I've been in error on ET posts, but this isn't one of them.

Come on... we're not talking about "fraction-of-penny scalping" for most discretionary traders.

I understand how "every fraction of a cent matters" to an HFT firm trading 80 Million shares per day.... who on ET is doing that? Even if there are one or two, I wasn't addressing them or their style.

If you're a "discretionary trade scalper"... trying to "risk 1-tic to make 2", you're playing too hard of a game. Odds are better at "risking a couple of points to try to make 10"....(not "tics", "points") and in this case, a penny here-or-there, or $.50/contract isn't going to have all that much of an impact on the bottom line.... more important to "generally get the trade right", than the piss-n-moan over .01 slippage in the fill, or 50 cents commission diff. Sheesh!!

You just do not get it. I am not talking about HFT firms, I am talking about standard daytraders, or at least what's left of them. $.001/share for a guy doing only 100,000 shares (which is small) a day is $100. On an annual basis that is over $20,000. It's not small potatoes when talking about independent traders trying to make a living. There are guys who are doing 4-5 mil shares a month and a $.001 reduction in commission costs is 4-5 grand/month in their pocket.

Many of the guys doing larger volumes are not scalping for pennies, they are actually intraday swing trading for larger shares. At the end of the day, all those shares traded add up. To say that a $0.001/share difference should not matter is plain ignorance.

Try to learn something, you obviously have no experience with the daytrading prop world. Anyone that I know who is still trading is not scalping and have not been for at least a year. However they are still doing volume and commission costs matter a lot.