Never let a profit turn into a loss. (Good or bad advice)?

Quote from Barth Vader:
....one market I trade [futures]has the following current probabilities:
1) 89.8% probability.....
2) 98.5% probability.....
3) 7.9% probability......
4) 96.7% probability.....
5) 79% probability.....
6) 84% probability.....
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?......the eMini S&P "conformed" to each of those today? :confused: :eek:
 
Hi Barth,

How were the probability stats derived? Are you saying this is across all markets?

thanks,

Walt

Quote from Barth Vader:

Au contraire Gabbie ! One of the extremes, from a day-trading perspective is the only place to be!

Regarding the OP's question, my answer [from a day-trading perspective] is never let a statistical bias turn into the opposite.

Example, one market I trade [futures]has the following current probabilities:

1) 89.8% probability that one extreme of the pit session will be made in the "D" print.
2) 98.5% probability that the "E" print will not trade both sides of the "D" print.
3) 7.9% probability that one extreme holding all day will be the "E" print.
4) 96.7% probability that the current pit session will not trade through both ends of the previous pit session extremes.
5) 79% probability that the close of "D" print, relative to the previous days close will be equal or better at the close of the current pit session.
6) 84% probability that one extreme from the overnight will hold as an extreme in the pit session.

My bias is achieved by reconciling the open of the pit with the above probabilities. Once my bias is confirmed, I will not change direction until the probabilities tell me to do so. So, since I have no idea that my trade entry will be a short term pleasantry, I will defend my bias by entering multiples up to the point where the statistics tell me to cease, in which case I promptly puke them all.

So, in closing, and to answer the OP's question directly.."It depends on how strong your faith in your bias is..."
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Quote from nazzdack:

?......the eMini S&P "conformed" to each of those today? :confused: :eek:
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Really !?

The indexes , currencies and bonds are markets that I have not been able to find a tradable set of probabilities based around MP.

I know there is a structure somewhere in these markets but I have not had the need to look that hard :)
 
Quote from jones247:

Hi Barth,

1)How were the probability stats derived?
2) Are you saying this is across all markets?

thanks,

Walt
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Hello Walt

1) By reveiwing the market profile print tendencies by session (overnight vs. pit). I trade based upon the active months statistics, usually around 70-80 days worth of usable data, and then I transition the back month data into the new active until it has enough days to be relevent.

2) NO!! Some of the Ag products and one soft market has a very reliable structure for Market Profile.
(Edit: Also two of the meats are pretty good)
 
Quote from ammo:

what time is your a print and why and what time zone
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Yep, good point

My D print is MY time 8:30 but universally D print is 9:30

Universal TPO's start with big "A" at 8:00 and small "a" at 2000
 
Quote from billyjoerob:

Over thousands of trades, it doesn't matter what happens in one trade, so trying to maximize your win rate is irrelevant. The same for scaling in and out -- that's about maximizing win rate, which doesn't matter. Scaling out of a position between 30 and 40 is the same as selling at 35, even if it appeals to your psychological weakness for winning trades.

The real issue is not wins or losses, but selling losers and holding onto winners. That's why scaling out makes no sense - instead you should be pyramiding into winners and selling when the trend changes or your stop is hit.
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Mathematically, that may be true in the majority of well-behaved cases, but someone who scales out half and then sees a huge adverse overnight event occur is a lot better off than the guy hanging on to the whole position in search of the higher target.

In other words, Scaling out of a long position between 30 and 40 is much better than hanging on for 40 if the price stops advancing at 37, and then craters to 22 overnight.

Personally, I prefer scaling out for the following reasons:

1. Lessens the risk factor of unforeseen black swan events. Having a fully loaded position head into a disaster is much worse than one that has already been 50% cashed out.

2. Tends to accomplish efficient usage of capital, since positions often reverse and consolidate on the way towards eventual targets and there is often a lot of wasted time during that portion of the trade, where your money could be deployed to pursue other new trades. Also, you can always reload the original position when it starts trending again.

3. Conditions you psychologically to take significant profits more often. This makes it easier to handle the losses that occur after reversals, since you never watch large profits disappear, only small gains or trades that never get off the ground.

4. To use a phrase from poker - scaling out gains prevents market tilt. Just like the poker player who gets AA cracked or loses set-over-set, it can be psychologically aggravating to watch a perceived massive profit disappear into a loss. Often this can lead to revenge trading, or cause hesitation in subsequent trading. Scaling out avoids that kind of psychological issue in many cases.

I am usually more willing to move the stop up to preserve 50% of a decent gain than simply to a break-even level. The idea is to pinpoint the relative level of gain that would piss you off it were to reverse and turn into a breakeven or loss trade. There is nothing very rewarding about stopping out at break-even, whereas half your accumulated profit is still a profit.

Another option is to run a trailing stop that locks in most of the gain once you get close to the profit target. This is to stop those cases where the move gets within a close distance to your target area and then reverses back down quickly.
 
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