Nearly Random Entry vs a High Probability Entry

[goldenarm]

It doesn't matter what instrument you trade. Random entries and lack of selectivity will kill your account in commissions. Unless you trade something that doesn't have commissions!

If you trade an instrument randomly throughout the day and apply sound risk management and solid exit strategies, you can always be GROSS positive. That's a given, and I know many equity traders who are gross positive at least 230 days out of the year. However, a choppy and non-trending market will cause you to lose in COMMISSIONS despite being gross positive. We all know that being gross positive everyday doesn't pay the bills. You have to beat the house as well!

Yes, in a trending market, random entry methods will probably make you NET positive. But the real test comes from trading choppy, listless days (which are 80% of the time).

The beauty of being selective is knowing when to trade and when to stay on the sidelines and preserve capital. A random method makes no distinction between good days and shitty days.

Over the span of a year, you'll be lucky to come out flat after commissions while trading a random entry method. In all probability, you'll be NET negative. I challenge anyone to prove me otherwise!

 

[nitro]

Tripack,

Please accept my apologies - I stayed up all night trading the ES/NQ and I simply did not register what you were saying.

Sorry

nitro

Quote from TriPack:



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.

 

[TriPack]

Quote from nitro:

Tripack,

Please accept my apologies - I stayed up all night trading the ES/NQ and I simply did not register what you were saying.

Sorry

nitro

Nitro,

Don't worry about it. I know I've said some things I wish I could take back. Anyway, good trading to you.

 

[damir00]

Quote from goldenarm:

yada yada yada

that was the funniest post, ever.

 

[PatternMaster]

Quote from damir00:


there is no edge in picking entries, none whatsoever. the only edge out there is money management, and the solution to that comes from you as a trader: what are you comfortable risking, holding etc.

No edge in picking entries? So, if I pick an entry and get out randomly, say at the close, this will not work?

Lets say I only buy, a single contract of the ES once a day if a signal is given. Once the signal is given, it is only MOC. This will not work, right? No money management.

Well, check the graph. This does not trade every day, but it does as I indicated, a single trade closed out at the market close. NO STOPS! No money management, ONLY A PICKED ENTRY.

You don't want to see this with sell signals, stop points, profit targets.....

Yes, Entry only can work...don't be so quick to say it doesn't.


PM

 

[damir00]

Quote from PatternMaster:

Yes, Entry only can work...don't be so quick to say it doesn't

sorry, but i never said it doesn't. since any entry point is on average as good as any other entry point, it is an obvious corrollary that many many kinds of entry picking will "work". that's not the question.

the question is "does it work better than random".

i hope i said that clear enough this time, some people are having a difficult time grasping this.

 

[damir00]

Quote from PatternMaster:

You don't want to see this with sell signals, stop points, profit targets.....

i'd settle for entry signals. all i see on there is a couple of post-facto lines, can you direct me to what i'm supposed to be looking at?

but seriously, feel free to post the entries on the LottoGirl board starting next week, maybe you'll be The One - cause it sure ain't gonna GG or dbphonics.

 

[OnTheEdge]

In perusing this thread I have a few non-random concerns.

In view of hacking and crooks, I would never recommend anyone opening up his brokerage account for view. In fact, I'd be suspicious of the suggestion itself. That is a red flag to me and it's certainly not necessary for proof of efficacy.

When trades are posted in real time, that's a commitment, and it doesn't matter if it's on paper or if money is on the line, because the public commitment has been made, and judgments can be formed based on those public real-time trades.

I don't see any advantage in "proving" that you invested money in the trade. The issue is whether the trade was profitable and how profitable it might have been, and if you can show a pattern of on-balance significantly profitable trades. Posts in real-time can't be fudged. It's the people who post after the fact who can be fudging.

Anyone bothering to review Damir's thread will see that he has posted real-time entry and exits for trades that have been significantly on-balance profitable over a reasonable period of time.

What he has postulated in this current thread is that random entries for trades will prove more profitable on-balance than selected entries. He has set up a method for random entries, a method with which I haven't seen any quibbles, based upon lotto numbers.

What I haven't seen is anyone willing to pit his own method of trading against this random-entry method. It might be nice if others would establish a real-time entry structure with exit points in real time, so comparisons could be made.

Don't ask me, I'm a student of all of this, and not a competitor. But it seems to me that those who were saying they could do better than random might be willing to experiment in this way with proving that. Why not view it as a paper experiment? As long as the entries and exits are posted real-time, I personally would consider the test valid.

 

[Pabst]

Quote from damir00:



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.

Thank you Damir for the kind words, and certainly "criticism" can be captioned as none was intended per se. My post was just a gentle reminder from someone who has blown up several times and who still insists on some level that your strategy is viable.

IMO the path to consistent success in trading is knowing that the implementation of multiple strategies is worthwhile, dependent on conditions. I can't help but think of the Raider's last year. Rich Gannon, Jerry Rice, and Tim Brown playing like 25 year old's all season with a ball control passing offense. The type of strat that only veteran skill players can pull off consistently. But during the Super Bowl, bam, Tampa Bay was the trend day that waste's a season's full of fill and retrace trades.

However you have me pondering something I've always thought. Are any of us so skilled that our "proven" entries are any better than just throwing a dart (or using Lotto balls). In fact I think it can be argued that the tape fools most traders with such regularity that most entries are worse than random. Buying highs and the like because it feel's so good. So I, as apparently many others are interested in your trading and my best wishes.

Pabst

 

[Lobster]

Quote from damir00:




there is no edge in picking entries, none whatsoever.

Nicely said, but I am not yet sure I agree.