Here's an idea. Do you trade futures? For all I know you may be one hell of a trader but you seem pretty convinced I do no better than break-even so how about a little contest? You against me. We'll pick someone independent from this board to monitor the contest. What do you say. Win or lose I bet it will be fun. I'll check back tomorrow to see if you're game.
Money Mgmt beats Stops Everytime - Example
- Thread starter ProfitTakgFool
- Start date
I'm game. I'll trade anything but forex.
ProfitTakgFool, a big thanks to you for bringing some great discussion to this board! It is not often on these boards that a thread can attract so much discussion on what really matters. Always it requires a person who's really willing to give...to a community...of total strangers. 
Just to chime in, I have also learned that a per-trade stop loss reduces my edge. In fact, during the volatile last 12 months it reduced mine to negative territory. It's more efficient, as you say, to play it small, and in my case, to switch to a system-wide stop loss.
I think you mentioned at some point that you don't hold positions overnight, meaning if you get caught in a trend, you'll take losses by EOD? Might help with explaining it to the die-hard trend followers. Thanks for all the hints on scalping/market making, I have more trend following orientation but now I see it's possible to scalp really well. Do you think your strategy can be fully automated? Just how much of your edge is based on discretion?
Just to chime in, I have also learned that a per-trade stop loss reduces my edge. In fact, during the volatile last 12 months it reduced mine to negative territory. It's more efficient, as you say, to play it small, and in my case, to switch to a system-wide stop loss.
I think you mentioned at some point that you don't hold positions overnight, meaning if you get caught in a trend, you'll take losses by EOD? Might help with explaining it to the die-hard trend followers. Thanks for all the hints on scalping/market making, I have more trend following orientation but now I see it's possible to scalp really well. Do you think your strategy can be fully automated? Just how much of your edge is based on discretion?
No problem I don't trade Forex either. I won't be able to do this til the week of Aug 11th and how does 5 days sound? I guess we'll have to lay some ground rules which is going to be a challenge since you trade with stops and I scale in and out. What do you say the game is limited to the ES but as far as how contract sizes are managed I'm stuck. Worst case we can each learn something from each others method.
Right, don't hold overnight at this point but plan to some time in the future. The risks of holding overnight in this volatility is very high. I have messed around with some automation but the results have been less than promising. A large part of my strategy has to do with the time of day and the intrepretation of the move I'm fading. For example, just after the bell I'm more relaxed about buying bottoms because I have the rest of the day to make up the loss if one goes bad and the market is typically most volatile in the morning hour or so. The move just past lunch tends to go to a farther extreme so I'm more patient on that one and I typically don't fade anything in the last 1/2 hour because I don't want to get caught on the wrong side of a move only the closing bell can stop. Institional investors do their buying and selling during the last 1/2 hour so I'm up against a very strong opponent at that time of the day and, if I lose that battle I have no time to make the losses back. I will play with automation again in the future but it's going to take some serious tweaking.
Quote from kubilai:
ProfitTakgFool, a big thanks to you for bringing some great discussion to this board! It is not often on these boards that a thread can attract so much discussion on what really matters. Always it requires a person who's really willing to give...to a community...of total strangers.
Just to chime in, I have also learned that a per-trade stop loss reduces my edge. In fact, during the volatile last 12 months it reduced mine to negative territory. It's more efficient, as you say, to play it small, and in my case, to switch to a system-wide stop loss.
I think you mentioned at some point that you don't hold positions overnight, meaning if you get caught in a trend, you'll take losses by EOD? Might help with explaining it to the die-hard trend followers. Thanks for all the hints on scalping/market making, I have more trend following orientation but now I see it's possible to scalp really well. Do you think your strategy can be fully automated? Just how much of your edge is based on discretion?
Average is about 5 per day. If the market is flying up, followed by plunges down, and repeating that throughout the day my activity will increase. If the market is trending all day long then I may get just 1 trade off. During very quiet times I will trade something else like Oil or the Ags but I prefer to stick with the indexes, mostly because of liquidity and readability. It's not hard to mess up a trigger fading something like Oil because the sample size is 1, compared to 500 for the ES. That's why the ES is more responsive to statistical analysis. Also, volume on the NQ and ER2 are much lower so those two instruments can go to extreme price movements, come back into a normal movement, and then resume the extreme movement all over again. That can get tricky and when I will typically stop out or trade out.
P,
In my experience, most of the time, the lunch move will usually go against the morning trend, assuming there was even one, and fake a lot of retail traders into thinking the trend could reverse. The 15 min OR could be very valuable during these cases in examing the possible "lunch move fade".
Judging from the personal trading bits you have shared this info could possibly be benefitial to your style of trading.
Anek
In my experience, most of the time, the lunch move will usually go against the morning trend, assuming there was even one, and fake a lot of retail traders into thinking the trend could reverse. The 15 min OR could be very valuable during these cases in examing the possible "lunch move fade".
Judging from the personal trading bits you have shared this info could possibly be benefitial to your style of trading.
Anek
Anek,
Thanks for the insight. One of my trading buddies trades what he calls the lunch time rotation, which goes along the lines of what you just said. A strong uptrend will reverse and break the support level taking longs out and pulling shorts in, then resume back in the direction of the AM move. That kind of moves is something I would look to buy as long as it goes far enough to catch my trigger. It's very frustrating when it doesn't but if the market has a definite bullish feel to it - or bearish as the case may be - I will buy it early with a small position and try and let it run.
Tks!
Thanks for the insight. One of my trading buddies trades what he calls the lunch time rotation, which goes along the lines of what you just said. A strong uptrend will reverse and break the support level taking longs out and pulling shorts in, then resume back in the direction of the AM move. That kind of moves is something I would look to buy as long as it goes far enough to catch my trigger. It's very frustrating when it doesn't but if the market has a definite bullish feel to it - or bearish as the case may be - I will buy it early with a small position and try and let it run.
Tks!