Need Advice

[trader99]

Acct 1:
Win Rate: 100%
Avg Points per trade: 1.19


Acct 2:
Win Rate: 100%
Avg Points per trade: 1

Basically just scalping. I'm still not 100% convinced yet. Need more data to be statistical significant. If this was the stats after hundreds to thousands of trades then it's a sign of sustainability. Then I will scale.

Obviously, I do NOT need it to be 100% win rate. I want my profit factor(PF) to be high. It's 1:1 now. Or slightly worst. I need to make multiple of my risk...

I think there are some hidden risks in this strategy. Need to continue to refine it.

 

[ironchef]

Now, just to clarify a little bit. There has been multiple times where I've doubled, tripled, and at one time 10x(albeit a very small starting base) my account! But I kept NONE of the gains! And this has been happening on and off for a while. So, I say I have good signals but HORRIBLE risk management.

Did it occur to you that this means you really didn't have a system, it is a classic random walk outcome, risk management or no risk management.

 

[trader99]

Did it occur to you that this means you really didn't have a system, it is a classic random walk outcome, risk management or no risk management.

It did occurred to me.

 

[Xela]

I want my profit factor(PF) to be high. It's 1:1 now. Or slightly worst. I need to make multiple of my risk...

Are you possibly confusing "profit factor" with "reward-to-risk ratio", here?

"Profit factor" is just a single number (it's total profits divided by total losses, and it needs to be above 1.0 for the system to be profitable overall, clearly).

If your reward-to-risk ratio is currently 1:1 and the system barely profitable, or slightly profitable over small numbers of trades, there are (at least) two possible ways forward: increasing the R:R, and refining the entries and/or trade-management to increase the win-rate. I'm not arguing with you ... I'm simply suggesting that you don't assume that a higher R:R is necessarily the best avenue, from here. It might be; it might not be.

"Forum wisdom" is typically that one should have higher R:R ratios, but many of the most successful traders I know, myself, actually don't. I'm "just saying".

 

[trader99]

Acct1:
=====
13 Pts: Good short on NQ. Covered before it rebounded. Good trade management.
3.75 Pts. HORRIBLE trade. Even though I ended up making money. Back to the old habits of holding a long time until it recovered. It is this kind of trade that if unchecked destroys my good record. But the R:R is HORRIBLE. The irony is if I had held much much longer than the R:R would have been fantastic. haha.

I noticed when I have a "view" of the direction then I can hold onto positions for a huge gain. But views are dangerous animals..

NQ Win Rate: 100% But horrible trade management.

Acct 2:
====
3.75pts: Good trade. Though I could have easily gotten more. Got out too soon
1.25pts: Back to quick scalping
NQ Win Rate: 100% Should have gotten bigger profits..

NG: Small loss. Should have cut losses faster especially when I knew the signal had reversed. But saving grace was I got out fast! I made back some of the losses on a separate trade.

ZW: I had a good trade on with size. But got out at a smaller than maximum profits because I was managing too many positions. I should have exited way better. But glad I got out because that small profit would have been a loss now!

Good news is that this is going in the right direction. Trades that previously destroyed my entire day's P&L are now resulting in profits and when I'm wrong small losses. I feel a lot better than even a week ago. There are still a few areas I want to refine before I scale. Consistency in execution is very important in short term trading. It has to be automatic. Can't be deer in the headlights.

 

[trader99]

Are you possibly confusing "profit factor" with "reward-to-risk ratio", here?

"Profit factor" is just a single number (it's total profits divided by total losses, and it needs to be above 1.0 for the system to be profitable overall, clearly).

If your reward-to-risk ratio is currently 1:1 and the system barely profitable, or slightly profitable over small numbers of trades, there are (at least) two possible ways forward: increasing the R:R, and refining the entries and/or trade-management to increase the win-rate. I'm not arguing with you ... I'm simply suggesting that you don't assume that a higher R:R is necessarily the best avenue, from here. It might be; it might not be.

"Forum wisdom" is typically that one should have higher R:R ratios, but many of the most successful traders I know, myself, actually don't. I'm "just saying".

Yeah. Sorry for my wrong usage of those terms. I meant R:R.

You do have interesting points. The reason why today's points gain per trade was so much higher than 1 NQ points I had yesterday was that I was willing to take on more risk. Sit through more noise and hold longer for the bigger moves.

Now, the big question is that necessarily the best way forward? I'm not totally convinced yet.

I know scalping for 1 NQ points each time is lower risk. But my transaction cost(IB commissions) is nearly HALF of my profits. I guess if I do enough volume I can switch to a different commission model on IB.

My "holy grail" is to be able to dynamically scalp when needed and hold when needed. I'm still working on that. I'm not saying that system will be perfect. I believe there's a happy medium between constantly scalping for 1 NQ points and holding for bigger moves but sitting through some scary risk.

My preliminary thoughts are if you have "open profits" then you can allow slight pullbacks and wait as the trend unfolds. If you are entering a position then if you are wrong get out quickly. That way you limit your loss and keep your profits potentially open-ended.

what do you think?

 

[Xela]

my transaction cost(IB commissions) is nearly HALF of my profits. I guess if I do enough volume I can switch to a different commission model on IB.

Hmmm, maybe, yes ... apologies for sounding negative, but it's pretty difficult to imagine that a trading model in which the dealing costs represent 50% of the profit is really going to be profitable over the long term ...

I believe there's a happy medium between constantly scalping for 1 NQ points and holding for bigger moves but sitting through some scary risk.

I think I hear you ... one of the things I like about NQ is its apparent reliability at giving you more than a point. I'm perhaps biased, though: I'm not a scalper, and I won't even trade it for 4 ticks: my absolute minimum is 5 ticks (usually more!), and even that's only when 5 ticks is just the first-stage target of two or three.

My preliminary thoughts are if you have "open profits" then you can allow slight pullbacks and wait as the trend unfolds. If you are entering a position then if you are wrong get out quickly. That way you limit your loss and keep your profits potentially open-ended.

what do you think?

Again, I hear you. I do that with parts of some of my positions, depending on the entry-type. Sometimes I have a set target (when I say "set", I mean that it varies according to the volatility but that it's entered with the trade, for the entire position-size), sometimes I have two (each for part of the position, with the volume not necessarily divided 50/50 between the two) and sometimes I'll have two with the hitting of the second still leaving some of the position open, in profit, in case it will run further, as they've been known to on the right day of the week and with a following wind.

I certainly want to get out quickly, if I'm wrong, though: I need the price to move in my favour pretty quickly after I've entered (or at the very least not move against me), otherwise it was a losing entry, in which case I want to be out right away, rather than hanging around to see if it still "comes good". That's not for me. I can always re-enter.

 

[Xela]

It's too late to edit my post just above, now, but where I said ...

Sometimes I have a set target (when I say "set", I mean that it varies according to the volatility but that it's entered with the trade ...

... I should have said "... I mean that it varies according to both the volatility and sometimes according to my perception of local/recent S/R as well ...".

 

[trader99]

"Hmmm, maybe, yes ... apologies for sounding negative, but it's pretty difficult to imagine that a trading model in which the dealing costs represent 50% of the profit is really going to be profitable over the long term ...

"

LOL. What I meant is that large scale scalpers might do large number of contracts and scalp for even less than 1 point and still be ahead. Not that I'm at that scale. But let's say they might do 50x a day(super active) scalping at 1 NQ points. 50points * 20 = $1000 - $500(commission)= $500. That's on just 1 lots. A big scalper might do many more lots per trade.

My point is if I go to a cheaper commission model then that $500 cost might go significantly down. But I don't think my goal is do 50x a day with 1 point scalps! LOL. That's not my style.


"I think I hear you ... one of the things I like about NQ is its apparent reliability at giving you more than a point. I'm perhaps biased, though: I'm not a scalper, and I won't even trade it for 4 ticks: my absolute minimum is 5 ticks (usually more!), and even that's only when 5 ticks is just the first-stage target of two or three."

1 point is just 4 ticks. Commissions at IB is 1 tick already. So to be net 1 NQ point I would need 1.25 pts per trade. That's not my game either. I was just experimenting yesterday. Today I got from 3-14 points. I like that better. But I need to make it more consistent.


"Again, I hear you. I do that with parts of some of my positions, depending on the entry-type. Sometimes I have a set target (when I say "set", I mean that it varies according to the volatility but that it's entered with the trade, for the entire position-size), sometimes I have two (each for part of the position, with the volume not necessarily divided 50/50 between the two) and sometimes I'll have two with the hitting of the second still leaving some of the position open, in profit, in case it will run further, as they've been known to on the right day of the week and with a following wind."

Multiple exit points sound like a great idea! I'm in experimental mode with just 1 lots. So can only have 1 exit price. hehe.

"I certainly want to get out quickly, if I'm wrong, though: I need the price to move in my favour pretty quickly after I've entered (or at the very least not move against me), otherwise it was a losing entry, in which case I want to be out right away, rather than hanging around to see if it still "comes good". That's not for me. I can always re-enter."

That's the biggest lesson I've learned. Cut losses short. Cut losses short. The only way to stay in this game and prosper is to cut losses short.

 

[Xela]

What I meant is that large scale scalpers might do large number of contracts and scalp for even less than 1 point and still be ahead.

Yes, certainly ... but they're institutional scalpers, not retail traders, of course.

My point is if I go to a cheaper commission model then that $500 cost might go significantly down. But I don't think my goal is do 50x a day with 1 point scalps! LOL. That's not my style.

Nor mine (and I think you're right not to try it, anyway!).

Today I got from 3-14 points. I like that better.

Much better.

I'm in experimental mode with just 1 lots. So can only have 1 exit price. hehe.

I understand ... I do think this is a drawback of "single lot trades", though. Years ago, one of the reasons I tolerated spot forex for so long (perhaps wrongly, but I got away with it, as it turned out) was that I was reluctant to trade only single contracts of futures until I was better funded.