Kathy Lien and Boris Schlossberg
- Thread starter cstfx
- Start date
1. If you go back to your history of trading, you will find that 90% of the trade that hit your breakeven, have revisited the point where you took your profit. (I even know the most likely time it would do it).
2. Point 1 leads to a better trading strategy. So there are better trading strategies.
3. Point 1 is due to a mathematical result.
4. There are also "perfect strategies" but they are rare (but not rare when market is volatile). An example took place in stock market on Thursday, and I alerted about it here on ET. It is called "The Guys Behind The Door" (if door is open and there is a pit with a trap gate, you know where the guys go). If NDX 1204 was to be penetrated, mathematically the price had to fall to the bottom of the pit (which is lower than or equal to the bottom of an earlier gap).
http://www.elitetrader.com/vb/showthread.php?s=&threadid=99143&perpage=6&pagenumber=547
5. The non-sure things need to have the support of theories (not to prevent them from failing, but to plan for the extent of their failure and prepare accordingly and in an optimal manner).
6.PM me if you wish to discuss this more.
Regards
Actually that's totally false. I went back and checked for the past six months and in more than 60% of the time the price moved not only beyond our breakeven but beyond the -30 stop that you suggest rendering the whole trade a loser.
There are only two possible payoffs in trading - high probability or high profit.
Most traders seek the holy grail of BOTH high probability and high profit. In short they are too greedy and lose.
Our strategy sacrifices some profit in order to achieve high probability. we know its limitations and advantages.
2. Point 1 leads to a better trading strategy. So there are better trading strategies.
There are always better trading strategies but for the time being this one is generating alpha through high and low vol environments so we will continue to execute it.
3. Point 1 is due to a mathematical result.
May very well be.
4. There are also "perfect strategies" but they are rare (but not rare when market is volatile). An example took place in stock market on Thursday, and I alerted about it here on ET. It is called "The Guys Behind The Door" (if door is open and there is a pit with a trap gate, you know where the guys go). If NDX 1204 was to be penetrated, mathematically the price had to fall to the bottom of the pit (which is lower than or equal to the bottom of an earlier gap).
http://www.elitetrader.com/vb/showthread.php?s=&threadid=99143&perpage=6&pagenumber=547
I am glad you call worked but there are no perfect strategies. I am sure TGBTD strat will fail sometime.
5. The non-sure things need to have the support of theories (not to prevent them from failing, but to plan for the extent of their failure and prepare accordingly and in an optimal manner).
It is impossible to know just how start will fail until they do. Or rather it is possible to know GENERALLY but not specifically that why we let the market environment tell us. I am a huge adversary of mathematical models. In my experience ( and I have had the pleasure/misfortune to watch hundreds of algo's trade in FX - EVERYONE of the systems I observed lost all their profits and most of their equity in the end.
Markets are psychological, not logical and you cannot engineer a profit in the long run (unless you are Simmons or DE Shaw and since we have not real idea what they do we have no true knowledge of how much discretionary oversight their funds contain).
6.PM me if you wish to discuss this more.
Regards [/B][/QUOTE]
Readers:
The quote above from JBT's study should improve jbt's trading substantially.
Could you propose how?
1. Are you sure there are only two? How about in between?
2. Are high probability and high profit exclusive? ( I assume that what you mean by high profit is high reward/risk ratio. If otherwise, please specify).
3. Is there a unified formula to approach the problem?
That's what I believe after observing markets for more than 20 years - but I am always open to any new ideas.
Also risk while I appreciate the intellectual exercise of trying to improve our trading method, we are not soliciting ideas here. Having banked 21 straight winners in a row, the system is operating as well as we can possibly expect.
I came on this thread to refute the lies the K and I don't trade and I am more than happy to discuss any FX trading issues that anyone may have, but I do not want this thread to turn into talmudistic discussion of BKT's trading approach. Our subs are happy and hopefully we will continue to reward their faith in us.
1. In regard to lies/insults, I have been subject to them. I know how it may feel when wrongs are done.
2.
3. One of the quantities I use in my decision making is the maximization of: X * Y, where X=p/(1-p), and Y is reward/risk ratio, where p is the prob of a winning trade.
4. X is one extreme. Y is the other extreme.
PS: Y can be controlled, X cannot. In addition, X and Y can both be high, but are rare and difficult for average traders to find and recognize. They are not exclusive in general. In fact at bottoms/tops or nearby, both quantities are high. Finding such super trades is however not needed to make money as long as quantity in point 3 is greater than 1.
2.
3. One of the quantities I use in my decision making is the maximization of: X * Y, where X=p/(1-p), and Y is reward/risk ratio, where p is the prob of a winning trade.
4. X is one extreme. Y is the other extreme.
PS: Y can be controlled, X cannot. In addition, X and Y can both be high, but are rare and difficult for average traders to find and recognize. They are not exclusive in general. In fact at bottoms/tops or nearby, both quantities are high. Finding such super trades is however not needed to make money as long as quantity in point 3 is greater than 1.
good points... btw congrats on the cnbc appearance this am, it was good to see you. solid t/a and market analyses. 
http://www.cnbc.com/id/15840232?video=965358464&play=1
-k
http://www.cnbc.com/id/15840232?video=965358464&play=1
-k
I had a free trial back in 2006, most of their High Probability Setup trades were losers.
I wonder why they don\'t offer a free trial any more
Here is one BS email they sent when there was a Sunday night gap
We were stopped on our short GBP/USD (-20) earlier
in the day (1:13 PM EST). For those of you wondering
how that\'s possible our dealer makes markets on the
weekends - but even those dealers that do not will
generally honor your stops even on gap opening
such as we are having tonight. Generally, gap
openings over the weekend are very rare in FX - they
happen no more that 4 times a year, but tonight\'s
price action underscores the importance of always
trading with stops in order to control risk.
Well hardly an hour into the trade we got stopped on
USD/CAD at 1290 (-30).
We were taken out of the short EUR/JPY at 149.60
(-25)
The market didnt even give us a chance
We took a stop at 6695 today, but many of you may
still be in the trade since our original stop was
6690 and we moved it up in the middle of the night.
We are stopped out on EUR/GBP at 6695 (-11 points)
on the trade.
We got stpped on GBP/JPY (-50) at 223.65
NZD/USD declined sharply in the last hour as a
general wave of dollar strength ahead of the FOMC
meeting tomorrow has pushed the pair to .6635. We
are unfortunately out of the trade having covered
for a small loss before the week-end.