If trend following, can money management save you in chop?

[bwolinsky]

On the subject of Chop this as close to the best example of chop trading within downtrends as you're going to get.

Since another strategy of mine was short on 12/1, this method would not have taken any long trades until the bottom of the 19th which on the 16th the chart would have been trail stopped out of its short signal, but I started taking all of the trades from the 16th on.

If that's not the best way to trade chop, I don't know what else might be.

Money management has nothing to do with this fixed position size strategy. If your method has edge or two of your methods have edge then the profits take care of themselves.

It's foolish to think money management on its own will make you profitable, and I can tell you with certainty that it is nonsense to think that flipping a coin with good money management furthermore will ever be profitable over any lengthy period of time.

 

[oldtime]

Quote from bwolinsky:

On the subject of Chop this as close to the best example of chop trading within downtrends as you're going to get.

Since another strategy of mine was short on 12/1, this method would not have taken any long trades until the bottom of the 19th which on the 16th the chart would have been trail stopped out of its short signal, but I started taking all of the trades from the 16th on.

If that's not the best way to trade chop, I don't know what else might be.

trailing in a chop? Isn't that kind of an oxy moron?

 

[bwolinsky]

Quote from oldtime:

trailing in a chop? Isn't that kind of an oxy moron?

For a daily system, it was choppy from 12/1 to the second lower high in that chart. Then it became a lot easier.

My trailing stop activates on about a 1% profit, but the entry 12/1 would have been much more favorable for that system if it waited until the first lower high in the chart.

Waiting on that entry, going from 2337 to 2215 and letting it come back 35 points was a very good trade for me even if I did choose to exit the trade on the stop loss hl buy before it, the trade ended on the lower high around the trail stop anyway. That's just an example of good technique. There's nothing discretionary about knowing when to augment two different mechanical system's signals so that they complement one another.

Once that signal ended, I took all of the trades after the 15th.

 

[oldtime]

Quote from bwolinsky:

For a daily system, it was choppy from 12/1 to the second lower high in that chart. Then it became a lot easier.

My trailing stop activates on about a 1% profit, but the entry 12/1 would have been much more favorable for that system if it waited until the first lower high in the chart.

Waiting on that entry, going from 2337 to 2215 and letting it come back 35 points was a very good trade for me.

Once that signal ended, I took all of the trades after the 15th.

whatever, unless you're so rich that you can send out the first years income of your life like a pawn in a chess game, paper trading is a poor man's way to see what's working.

Like you say, see what's working and then take it.

 

[bwolinsky]

Quote from oldtime:

whatever, unless you're so rich that you can send out the first years income of your life like a pawn in a chess game, paper trading is a poor man's way to see what's working.

Like you say, see what's working and then take it.

None of that was paper trading. My CTA made 22% this month on those trades.

Again, think 1 better system says to be short on 12/1, then you wait for it (the system in the chart) to enter short, exit when it says to but don't reverse, then taking only the shorts is far more robust than taking longs that aren't going to be profitable since that system says to be short you would close your shorts but wait to re-enter them and ignore the longs until after the daily system is out on its trail stop.

This occured on the 16th, and we knew to take all of the trades after that since the short signal was over and we were pretty sure the market would see-saw for a while.

 

[oldtime]

Quote from bwolinsky:

None of that was paper trading. My CTA made 22% this month on those trades.

oh ok, I have better luck just trading on paper until I see something is working,

my leading indicator is my paper account, once I start trading live, I start fooling around in paper and hopefully it is ready when the old "edge" as they call it wears off.

You did better than me for DEC

 

[bwolinsky]

Quote from oldtime:

oh ok, I have better luck just trading on paper until I see something is working,

my leading indicator is my paper account, once I start trading live, I start fooling around in paper and hopefully it is ready when the old "edge" as they call it wears off.

You did better than me for DEC

Oh, you're saying you're paper trading? Ah.

I don't think it is wrong to do that at all until you're sure you have something profitable enough to committ capital to.

 

[oldtime]

Quote from bwolinsky:

Oh, you're saying you're paper trading? Ah.

I don't think it is wrong to do that at all until you're sure you have something useful to committ capital to.

no, I keep them both going at the same time. Once I'm trading live I stick with it, but then I start tweaking the paper and see if that helps.

That's why I made the comment about your trail. Especially in a chop.

Never was there one thing I did that ruined my returns more than trailing. Thank god it was just in the paper. Maybe it's just my style, but the original idea was to ask how could you possibly trail in a chop? It seems to me that is the worst idea. I can see it trading small hoping you are in a mega trend.

 

[bwolinsky]

Quote from oldtime:

no, I keep them both going at the same time. Once I'm trading live I stick with it, but then I start tweaking the paper and see if that helps.

That's why I made the comment about your trail. Especially in a chop.

Never was there one thing I did that ruined my returns more than trailing. Thank god it was just in the paper. Maybe it's just my style, but the original idea was to ask how could you possibly trail in a chop? It seems to me that is the worst idea. I can see it trading small hoping you are in a mega trend.

No, pairs trading is very effective for that, especially with leveraged instruments guaranteed to hit zero or drawdown 90+%. I take away the trail stop, and the profit drops 70%, so I know my system well enough that I can tell you that that is useful for daily type systems and I've found leads to curve fitting in day trading even if you can look inside the bar to test.

Everyday I see chop, so I don't know if the op is more concerned about minimizing losses (stops) or maximizing profits (targets and trails). I don't think unless there's a sound methodology with edge that money management alone will help you, and I pity the fool that doesn't recognize a martingale because there's not any excuse ever for that kind of "money management" more commonly featured by 3rd party educational vendors that might demonstrate their methods just to blow their account up later when if you already recognize the method it's easier to distinguish a knowledgable day trader from a doomed one.

 

[oldtime]

Quote from bwolinsky:

No, pairs trading is very effective for that, especially with leveraged instruments guaranteed to hit zero or drawdown 90+%. I take away the trail stop, and the profit drops 70% so I know my system well enough that I can tell you that that is useful for daily type systems and I've found leads to curve fitting in day trading even if you can look inside the bar to test.

yes, I think a lot of disagreements on ET are two traders talking about completely different systems. Trails work for you and really hurt me.

Good luck 2012, you are already way up on me if you count DEC 2011