If You Trade One Instrument Only, How Do You Deal With This?

[NoDoji]

Quote from k p:

So what you're saying is don't follow anything in your trading journal from 2010?? LOL

May I ask why you choose to trade CL?

There's some good stuff in my trading journal, mainly the intraday scalping stuff. Sadly I didn't always follow my rules and often allowed my personal bias to toss risk management out the window. My day trading overall was pretty darn good back then.

CL offers a lot of excellent intraday opportunities for experienced, highly disciplined traders who trade with an advance plan.

 

[SimpleTrades]

Quote from tradingjournals:

A one instrument-only trader would in principle end his day either with a win, or a loss. Assuming a positive edge, losses would wait for future wins to be cleared. This correlation between wins and losses across time should be inherent to the results of any one instrument-only trader. If there is a 50/50 prob of loss/win, this can also be thought of as compounding only half the time at best.

How do deal with this? Some would say that is precisely why they trade two instruments or more-- and may proudly add that their profit center in one instrument would clear losses in the other instrument, which would then allow them to compound faster than one instrument-only traders.

Do the people who trade only one instrument think this is really a problem (assuming they were aware it was a problem)? If yes why? If not why?

For those who think/know it is indeed a problem, what are the techniques you use or know of to deal with it?

Those who trade multiple instruments, could you share your experiences and thoughts on this subject?

An answer I have would be to pool resources with another trader whose losses are not correlated to mine, which could reduce the variance of both without lowering the returns.

The aggregate sum of any combination of instruments traded reduces to a single theoretical instrument traded. Either way you are reduced to either a winning or a losing state at the end of the day.

 

[Swan Noir]

I'm not sure I understand this but I agree with it nonetheless!!

Quote from SimpleTrades:

The aggregate sum of any combination of instruments traded reduces to a single theoretical instrument traded. Either way you are reduced to either a winning or a losing state at the end of the day.

 

[SimpleTrades]

Quote from Swan Noir:

I'm not sure I understand this but I agree with it nonetheless!!

You can spend the whole day trading grapes, cherries, apples, oranges, etc. At the end of the day, however, you have traded, once, a fruit salad which is either tasty or not.

 

[jack hershey]

Quote from tradingjournals:

I believe you did not understand what I wrote. Also, your post summarizes how some students may view their teacher thoughts when they are learning something they have not yet learned/mastered but think they do.

I use three systems.

I do this for one reason: money vleocity considerations.

One algorithm underlies the three systems. So I use one algorithm only. The algorithm IS complete.

I do not have any down time. Markets offer; I take the full offer.



What you write lacks rationality.

You suppose something external to your incomplete environment.

The thesis of "more than one......" is all based upon unfinished business. The name is "incomplete".

 

[tradingjournals]

Quote from SimpleTrades:

The aggregate sum of any combination of instruments traded reduces to a single theoretical instrument traded. Either way you are reduced to either a winning or a losing state at the end of the day.

The post does not include the effects of variance and covariance (of the parts) on the variance of the whole.

 

[jack hershey]

Quote from tradingjournals:

The post does not include the effects of variance and covariance of the parts on the variance of the whole.

You have a typo and Wrong.

 

[SimpleTrades]

Quote from tradingjournals:

The post does not include the effects of variance and covariance (of the parts) on the variance of the whole.

If you're calculating variance, you're doing so on preexisting data. The trade(s) are already done.

 

[bwolinsky]

Quote from k p:

Thanks so much for the answer! I realize it might have been too much of a personal question but I wondered what a day trader would do if they had a sizeable amount of money since the day trader I would imagine wouldn't want to hold anything over night for fear of bad news and a major drop.

So what you're saying is don't follow anything in your trading journal from 2010?? LOL

May I ask why you choose to trade CL? My buddy was trading Russell 2000 and its interesting to look at the chart. It doesn't have the same look as most other charts with candle sticks in all sorts of sizes and both short and long wicks. It seems to either just move up, or down, and it does it fluidly if that makes any sense. Of course I have no idea what I'm talking about, but from my uninformed opinion, the chart of the Russell 2000 looks easier to trade than the sporadic nature of the ES or most other stocks out there.

This is your opinion and every time you talk is your opinion.

Just like in 12 talking about things you aren't informed about wastes everybody's time.

If you know your system, glancing at the chart should tell you how well it might work without having to backrest to be able to find out.

I have made my living on stocks food and energy so those markets maybe being as needful as they are have more to do with an efficient frontier analysis and back testing before ever worrying whether my instruments are too few in number or whether I might be correlated which at 0 monthly probably means no to that however that still had to be back tested to find.

Killing Nasdaq is where I've made practically all of my net income. Then corn and gas based on efficient frontiers that prevent the correlations and meaningless scalps you're always so concerned about.

 

[austinp]

Quote from Visaria:

Russell is better than ES in some regards. For one thing the spread is only 1 tick i.e. 0.1 compared to 0.25 for ES. I guess people here prefer ES because of the deeper liquidity and depth. But that shouldn't be an issue since i doubt if anyone here trades in hundred of contracts in a clip.

The main attraction with day trading CL is its daily range. Still quite large, about 170 cents a day on average. Used to be 200-300 a couple of years ago.

The Russell 2000 (TF) very often slips -1 tick on a stop, because it is rather illiquid. So the listed spread versus reality of fills are two different things. Bars on a static chart tell very little about how they actually form in real time with real money at work.

As for price action? TF is spiky and spastic due to illiquidity and by that I don't mean if you can or cannot personally fill a one-lot. The term "illiquidity" refers to available size when algos come ripping thru the price levels.

CL is still decent but it has zero price edge over ES or any other emini for the past year-plus. Day margin is twice as high in CL as ES, so you can trade two ES per one CL contract for the same margin size. Secondly, CL now makes 1 - 2 modest price moves per session and sometimes 0 at all. But it will chop sideways hard for hours in between, every day.

CL is decent, but no longer the most bountiful symbol. At best it's equal to the eminis, and many days greatly inferior in price action. The once mighty CL is merely a shell of its former self and that ain't up for debate... it is a structural fact visible on your own bar charts.