Nearly Random Entry vs a High Probability Entry
- Thread starter damir00
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29 pages debating the merits of a random entry method and no one has mentioned the obvious:
A random entry method is not profitable over the long-term because of COMMISSIONS! Sure, you could throw darts at a bunch of stocks and initiate positions (even if the stocks just flat-lined for most of the day), but COMMISSIONS would eat your account up. By learning to pick "high probability set-ups" that have good profit potential, you use your trades wisely, hence minimizing slippage.
Also, random entries eat up your buying power because you have to wait for the stocks to move, at the expense of better trading opportunities. If you randomly selected flat-lining illiquid stocks, then you wouldn't be able to trade the good ones that move!
The only way random entry methods can work with stocks is if your commissions are almost zero! Can't believe that all of the Einsteins on this thread couldn't figure that one out...
Damir00 is talking out of his ass and you suckers are feeding into his cockamamie theories!
A random entry method is not profitable over the long-term because of COMMISSIONS! Sure, you could throw darts at a bunch of stocks and initiate positions (even if the stocks just flat-lined for most of the day), but COMMISSIONS would eat your account up. By learning to pick "high probability set-ups" that have good profit potential, you use your trades wisely, hence minimizing slippage.
Also, random entries eat up your buying power because you have to wait for the stocks to move, at the expense of better trading opportunities. If you randomly selected flat-lining illiquid stocks, then you wouldn't be able to trade the good ones that move!
The only way random entry methods can work with stocks is if your commissions are almost zero! Can't believe that all of the Einsteins on this thread couldn't figure that one out...
Damir00 is talking out of his ass and you suckers are feeding into his cockamamie theories!
I would love to know if you trade this nonsense and if so what kind of stops and exits you use.
It's like saying you can always win in Vegas. That's true with infinite capital and no table limits - but in the "real world" we do have limited capital, that why the house always wins, and why you need specific guidelines for entries, as well as, stops and exits.
Maybe, maybe not. How can you say this if you cannot stick a numerical figure, good or bad, on his expectation of profit?
nononsense
this thread gets funnier and funnier. who ever said anything about 50% expectancy? what does that have to do with randomly-chosen entries? the whole point is that expectancy is far, far from 50% at each and every single possible entry point.
the conceptual barriers in here are astoundingly tall and some of you are seriously deep in the intellectual weeds on this. you are simply not getting it.
as to the guy asking how a 98% hit rate can be achieved by random entries, i answer the question with a question back: can you show me a TA/edge technique that does the same? if not, then how can it be done? how do *you* think it's done?
to Pabst: yours is the only thoughtful "criticism" i've seen here, and anyone not taking into account the situation you described would be a fool and would, most probably, blow up.
everything is on track to have LottoGirl up and running this weekend: see you all on her thread, i'm sure.
Quote from goldenarm:
29 pages debating the merits of a random entry method and no one has mentioned the obvious:
A random entry method is not profitable over the long-term because of COMMISSIONS!
DS is not trading stocks. I did not read on this forum that he was using a mechanical system to exit trades. Looking at his journal he displays some, if not a lot of, discretion in his exits. Also DS talks of trading a 'batch' of contracts with each position so he is not trading a single contract lot and each trade may not be the same batch size as the previous batch. Random entry + money management varying contract size + discretionary exits may be profitable under certain market conditions. Its success depends completely on the trader, and cannot be backtested with any level of confidence because of the discretionary exists.
With a discretionary exit and money management it becomes a question of how much money is at risk at any time, how good is the trader at exiting trades, and is this approach 'practical'. Practical means, is there a better way to profit with less risk. Over the past 2 months when prices have not trended, this approach appears to have been very workable.
DS said in one of the last posts that the next 6 to 8 weeks will be a real test of the system. I am sure we will see some good 3 to 4 day movements in YM that will indeed test the system. If each month contains only 1 period of 3 to 4 day trends the profits in the other days may exceed the losses in that 1 trending period.
As Pabst remarked in an earlier thread, there is no protection from a hard down day in the Dow. A 'perfect storm' such as wiped out LTCM and Victor Niederhoffer could happen tomorrow. Can the trader execute a rapid discretionary exit in the case of an extraordinary market shock? I donât know. The temptations to hold on to bad trades when the market is moving against you, and exiting good trades early seems to put a lot of pressure on the trader.
I am enjoying the thread. I am looking forward to reading the rules and monitoring the day to day drama of LottoGirl.
Commissions are a small factor in my opinion, and it is certainly not obvious that commissions are a key factor in this case.
ramora
Here's what the sample output looks like right now:
Go Long at Mon: 10:33
Go Short at Tue: 14:9
Go Long at Wed: 11:43
Go Short at Thu: 10:11
Go Short at Fri: 12:18
those are based on last saturday's powerball drawings. the 5 white balls determine entrytime, the red ball defines how the white balls are used to determine long or short.
there is another bit of randomness thrown in there because all the websites list the drawn numbers in numerical order. i'm perfectly happy having randomly-chosen shorts/longs go off later and later in the day as the week progresses, but i'm afraid that would be too confusing for dbphoenix so i decided to us a couple of internal generators to scramble the ball order.
i wonder, maybe LottoGirl should report several sets of trade entries. let's see, if there are 100 active traders on ET, and LottoGirl produces 5 sets of trades, then GG won't be able to lay claim to his "top 5%" anymore.
Go Long at Mon: 10:33
Go Short at Tue: 14:9
Go Long at Wed: 11:43
Go Short at Thu: 10:11
Go Short at Fri: 12:18
those are based on last saturday's powerball drawings. the 5 white balls determine entrytime, the red ball defines how the white balls are used to determine long or short.
there is another bit of randomness thrown in there because all the websites list the drawn numbers in numerical order. i'm perfectly happy having randomly-chosen shorts/longs go off later and later in the day as the week progresses, but i'm afraid that would be too confusing for dbphoenix so i decided to us a couple of internal generators to scramble the ball order.
i wonder, maybe LottoGirl should report several sets of trade entries. let's see, if there are 100 active traders on ET, and LottoGirl produces 5 sets of trades, then GG won't be able to lay claim to his "top 5%" anymore.
Quote from nitro:
ROFLMAO
Susan, once again, never mind - money talks...
nitro
Nitro, I have to say that posting this kind of stuff just makes you look bad. I think I got out of the show off phase somewhere in junior high, but I guess some people never get past that phase.
And the ironic thing is that you were originally going to challenge damir because of his contention that his random method could beat anyone's method, remember? Well the funny thing is that if you had bothered to read my posts instead of rushing to the reply key to challenge everyone on ET you would see that I'm in agreement with your position that a trading method with a selective entry has the edge over a method that uses a random entry. Oh the irony!
And on a humorous note, how am I supposed to trade a method that I don't even have, and why would I want to trade it in the first place let alone turn trading into a wrestling match? ET is funny stuff sometimes.
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