lbr's holy grail

K

kserra

Does anyone here trade off of this pattern ? I know that Linda bradford raschke still uses it herself and was wondering whether anyone else uses it as well ?

I myself currently trade the system using the ES on 3,5 and 7 minute bars only. I do not include non market hour data and tend to stay away from the first 20 minutes or so due to the whipsaw and potential for reversal. I seem to get at most about 5 trades a day tops anymore than that and I know I am overtrading.

I find that the system has about a 1:2 risk to reward and somewhere around a 50% winning average ( note this counts scratches as losers, therefore not including scratches the win ratio would be higher).

The problem I am having is backtesting the system is difficult because once I enter most trades my exits are pretty discretionary. Generally I am for the 1:2 risk to reward scenario but oftentimes I will jump out at 1:1.5 if I see the trade falling apart.

I suppose this system is pretty much the same as most trend following systems that rely on a pullback (i.e jeff cooper, dave landry type of trades) so I am just wondering how other people are doing trading this system, or one similar to it. Also if anyone has any data concerning the reliability of a system like this I would greatly appreciate it.
 
Teresa Lo once said (and still does, I assume) that there are only three types of setups: tests, retracements, and breakouts. Everything else is just variations on that theme, usually, it seems to me, for the sole purpose of selling books (e.g., the "bowtie"). Keeping this in mind can help one maintain focus when looking at new strategies and tactics, modifying old ones, evaluating what's advertised as "new".

Since at least some of the people I respect claimed to be doing well with retracements (pullbacks), I struggled for a long time to make them work but never could achieve the level of success with them that I required. I've been far more successful with breakouts and tests. Maybe it all has to do with one's genes.

One key, of course, is the strength of the trend, but an even more important key is being able to define that condition and backing off when you don't have it rather than force trades on days that just aren't conducive to your style. While I appreciate and, to a point, agree with the notion that one should become expert in one strategy before adding to the repertoire, one should also take care not to become set in aspic on the issue and develop minimum competence with strategies in each of the above general approaches. For example, while I look for breakouts all day, I also look at tests in the mornings. As for retracements, they are the least-used, largely because they tend to require wider stops.
 
Quote from wwatson1:

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Care to elaborate ? Any specific reason ? Bad experiences with retracements ?


dbphoenix thanks for the input, I definetly agree with the idea that one should become a master of one strategy before beginning to try to trade others, however this certainly does not mean that I have my blinders on when it comes to different setups. I also like to incorporate pivots into my trading just to watch how price bounces around and to give me a good idea as to whether I am buying into potential resistance (these trades I usually wait for a stronger signal ) or if I am buying at support ( I find these signals to be the strongest). Part of the reason I originally chose this system to trade was because I found it so easy to spot, after working with it for a while I feel like i know it's strengths (trend days) and weaknesses (chop ). I like the pivots and would like to incorporate them into a system but I still need more time with them before I can correctly utilize them.

In the meantime I am always looking for new systems that fit my comfort zone to trade, but I know from experience not to rush into any system without thouroughly checking the system out.

I am planning on creating a journal once I begin to trade this system so we will see how things go from there.
 
Quote from kserra:


dbphoenix thanks for the input, I definetly agree with the idea that one should become a master of one strategy before beginning to try to trade others, however this certainly does not mean that I have my blinders on when it comes to different setups. I also like to incorporate pivots into my trading just to watch how price bounces around and to give me a good idea as to whether I am buying into potential resistance (these trades I usually wait for a stronger signal ) or if I am buying at support ( I find these signals to be the strongest).
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A smart thing to do. There are fashions in trading as in anything else, and while pivot levels make work at one time, Fib might work better at another. Or MAs. Or sunspots.

One clue that the market is changing on you is the increase in tiny losses, which suggests that you're looking at the wrong thing. Plotting PLs or Fibs or whatever can often illuminate the situation, like blowing smoke across the gallery floor to betray the laser beams. You can't know you're buying into resistance if you don't know that the resistance is there.
 
Quote from kserra:

Does anyone here trade off of this pattern ?
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I use a modified version of this on the bonds and notes (in conjunction with a couple other things) and find it to be quite nice. I also tried the ES, but not as good. I find the bonds and notes to trend better thus offering better success with this idea.

Make 'em pretty, Chris
 
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