Numerical Price Prediction Challenge
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Giving structure precedence over position has made a significant difference—enabling me to raise what was a pathetic 55% daily success rate almost up to a barely respectable 70%.
The other big piece of advice I would offer myself is to give a lot more priority to large-sized scalping-styled trades with a high probability of ending with success over standard-sized swing-styled trades with a high probability of ending in success.
As for large-sized swing-styled trades with a high probability of ending in success, I have absolutely no interest in them whatsoever! Too much time passes between executing a swing trade and closing the position in which any number of “nasty things” could happen, thereby accompanying the high probability of success with the high risk of being handed a major loss should things turn bad.
The other result of adopting the above practices is that for the first time ever my average profit trade was more than double my average loss trade. This is the exact opposite of what used to characterize my trading. My average win-to-loss ratio never even came close to this before. If I can now manage to do it on a consistent basis, it will be bumping my trade performance up to another level indeed.
In any event, this officially concludes my "Numerical Price Prediction Challenge" as originally conceived, which I found to be an enjoyable little experiment.
It was actually inspired by the requirements set by some kind of financial planning outfit somewhere here in the USA and was a valuable exercise in that it proved to me I can trade successfully using a longer-term outlook than was my standard modus operandi previously.
Nonetheless, to limit myself to take-profit targets of 25 pips or more exclusively would prohibit the kind of discretion that just enabled me to realize a 2:1 average win/loss ratio, so in the future I will regard such targets as merely another option in the repertoire of trading strategies, tactics, and techniques I have at my disposal.
The other big piece of advice I would offer myself is to give a lot more priority to large-sized scalping-styled trades with a high probability of ending with success over standard-sized swing-styled trades with a high probability of ending in success.
As for large-sized swing-styled trades with a high probability of ending in success, I have absolutely no interest in them whatsoever! Too much time passes between executing a swing trade and closing the position in which any number of “nasty things” could happen, thereby accompanying the high probability of success with the high risk of being handed a major loss should things turn bad.
The other result of adopting the above practices is that for the first time ever my average profit trade was more than double my average loss trade. This is the exact opposite of what used to characterize my trading. My average win-to-loss ratio never even came close to this before. If I can now manage to do it on a consistent basis, it will be bumping my trade performance up to another level indeed.
In any event, this officially concludes my "Numerical Price Prediction Challenge" as originally conceived, which I found to be an enjoyable little experiment.
It was actually inspired by the requirements set by some kind of financial planning outfit somewhere here in the USA and was a valuable exercise in that it proved to me I can trade successfully using a longer-term outlook than was my standard modus operandi previously.
Nonetheless, to limit myself to take-profit targets of 25 pips or more exclusively would prohibit the kind of discretion that just enabled me to realize a 2:1 average win/loss ratio, so in the future I will regard such targets as merely another option in the repertoire of trading strategies, tactics, and techniques I have at my disposal.
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I wrote that when it comes to applying Numerical Price Prediction to a swing trading style of buying and selling currency pairs online, giving structure precedence over position leads to greater success. But what does that mean?
It’s obvious I’ve had no formal training when it comes to trading, so no doubt I am almost certainly using both words improperly in terms of how they are used among professionals and those who are knowledgeable. So in case I should ever have occasion to explain what I do to others in terms they will understand, I’m going to take his time to think about and write out what I actually mean so I will know what to say if and when the time comes.
After giving it a little consideration, I’d have to say that what I mean by “position” is actually trend, or more specifically, trend reversals (i.e., executing trades when a new trend is being initiated or is just starting).
Such opportunities are not to be trusted because a news event or the release of some type of fundamental data can cause an asset that has reversed direction to go one way to turn right back around and resume its former trajectory.
Whereas by structure (it occurred to me after a little bit of thought) I really mean typical price range, which can be trusted to a much greater extent because news events and the release of economic data are already “baked into the cake.”
When a reversal occurs after an asset has been pushing the limits of its typical price range, the odds that some type of factor is going to have enough power to turn it right back around and send it careening out of control to an even greater extent are slim to none. Like ninety-nine times out of a hundred, it’s just not going to happen.
In fact, now that I feel like I have a handle not only on applying NPP to guerrilla-style trading (scalping), but swing-style trading as well, I might opt to pass on trend-based trades altogether and only execute trades based on price range—especially given the fact that if the only time I do this is when trades are being executed in the same direction as the predominant trend, the number of occasions in which I am stopped out of a position is likely to approach zero.
(And to those who say trying to pick tops and bottoms is folly, I’ll simply turn a deaf ear. Or if I may, perhaps even go so far as to whisper under my breath… “Speak for yourself.”)
But wait! What if I’m not really done? What if I now get an inkling to move from day trading, to swing trading, to position trading?
That’s not likely to happen. For one thing, position trading would mean passing on too many opportunities to generate profits on a daily basis. And besides, price action is too haphazard to buy and hold for such extended periods of time unless one enjoys watching profits repeatedly materialize and disappear in succession, which I do not.
And finally, with greater time frames come greater drawdowns, not to mention the fact that mistakes (which I am guaranteed to make) are even more costly.
It’s obvious I’ve had no formal training when it comes to trading, so no doubt I am almost certainly using both words improperly in terms of how they are used among professionals and those who are knowledgeable. So in case I should ever have occasion to explain what I do to others in terms they will understand, I’m going to take his time to think about and write out what I actually mean so I will know what to say if and when the time comes.
After giving it a little consideration, I’d have to say that what I mean by “position” is actually trend, or more specifically, trend reversals (i.e., executing trades when a new trend is being initiated or is just starting).
Such opportunities are not to be trusted because a news event or the release of some type of fundamental data can cause an asset that has reversed direction to go one way to turn right back around and resume its former trajectory.
Whereas by structure (it occurred to me after a little bit of thought) I really mean typical price range, which can be trusted to a much greater extent because news events and the release of economic data are already “baked into the cake.”
When a reversal occurs after an asset has been pushing the limits of its typical price range, the odds that some type of factor is going to have enough power to turn it right back around and send it careening out of control to an even greater extent are slim to none. Like ninety-nine times out of a hundred, it’s just not going to happen.
In fact, now that I feel like I have a handle not only on applying NPP to guerrilla-style trading (scalping), but swing-style trading as well, I might opt to pass on trend-based trades altogether and only execute trades based on price range—especially given the fact that if the only time I do this is when trades are being executed in the same direction as the predominant trend, the number of occasions in which I am stopped out of a position is likely to approach zero.
(And to those who say trying to pick tops and bottoms is folly, I’ll simply turn a deaf ear. Or if I may, perhaps even go so far as to whisper under my breath… “Speak for yourself.”)
But wait! What if I’m not really done? What if I now get an inkling to move from day trading, to swing trading, to position trading?
That’s not likely to happen. For one thing, position trading would mean passing on too many opportunities to generate profits on a daily basis. And besides, price action is too haphazard to buy and hold for such extended periods of time unless one enjoys watching profits repeatedly materialize and disappear in succession, which I do not.
And finally, with greater time frames come greater drawdowns, not to mention the fact that mistakes (which I am guaranteed to make) are even more costly.
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Today's trading results have given me further reason to continue heeding the above advice...
And the price action I am observing has continued to confirm my opinion that it is better for me to base my entries on where a given exchange rate is located in terms of its typical price range than on whichever direction it happens to be headed at whatever point in time.
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I stopped concerning myself with profits eight years ago, winning percentages I have no value for me in trading. I concentrate on 4% and less of losing percentages of any system I have automated(14) or in testing real time. In very long term commodities, long/short term stocks, stock/commodity spreads and options I look at overall positions instead of one segment as all gets hedged in some ways. In intra-day of under 30 minutes, 92% of systems are scalping and all average down, including lone day trading method. I concentrate on very low drawdowns and losing percentages, because rather start a private hedge fund end of the year- when that goes well, perhaps seek outside funds, I think it pointless to seek outside funds if owners can't show they made millions first-got to have "skin" in the game to show being legitimate.
Never will do a book, enough books on the market and if too complicated for average human, they won't buy it, and books are pretty much a "dog and pony" show as you selling it to attract others to buy expensive seminar. Listen, people are a huge pain in the ass, the less money people have, the bigger the pain-but I will say, I rather enjoy my coffee with a tree than most humans, I don't understand most folks...
"When a reversal occurs after an asset has been pushing the limits of its typical price range, the odds that some type of factor is going to have enough power to turn it right back around and send it careening out of control to an even greater extent are slim to none. Like ninety-nine times out of a hundred, it’s just not going to happen."
You have not traded long enough, I been at this for 40 years, not much I have not witnessed. Yes, it is going to happen and if you not prepared, you will end up bankrupt. Obviously, you not back tested fifteen years using tick data, and must be programmed so less chances of putting your own beliefs of what the market should or not do, can't test that. Took me 23 tries to find Crude Oil highs a number of years ago at 147, if I was not prepared for how I look for extremes in trading, I be wiped out long ago and my targets are not 25 anything, they are 75% of the range of last 10 years min. The biggest money is always long term trading.
Good luck
Never will do a book, enough books on the market and if too complicated for average human, they won't buy it, and books are pretty much a "dog and pony" show as you selling it to attract others to buy expensive seminar. Listen, people are a huge pain in the ass, the less money people have, the bigger the pain-but I will say, I rather enjoy my coffee with a tree than most humans, I don't understand most folks...
"When a reversal occurs after an asset has been pushing the limits of its typical price range, the odds that some type of factor is going to have enough power to turn it right back around and send it careening out of control to an even greater extent are slim to none. Like ninety-nine times out of a hundred, it’s just not going to happen."
You have not traded long enough, I been at this for 40 years, not much I have not witnessed. Yes, it is going to happen and if you not prepared, you will end up bankrupt. Obviously, you not back tested fifteen years using tick data, and must be programmed so less chances of putting your own beliefs of what the market should or not do, can't test that. Took me 23 tries to find Crude Oil highs a number of years ago at 147, if I was not prepared for how I look for extremes in trading, I be wiped out long ago and my targets are not 25 anything, they are 75% of the range of last 10 years min. The biggest money is always long term trading.
Good luck
Perhaps it is true that I have not traded long enough, but as long as I am making money right now today, and continue to make money day-after-day, every single day, this is not really of great concern to me personally.
I did not say it will never happen. I already know it is going to happen. I have been at this for 7 years and I too have witnessed it a few times. It’s true that if you are not prepared you will end up bankrupt, but that’s what stop losses and risk management are all about.
Perhaps it is true that the biggest money is always long-term trading, but I know from personal experience that my system works FOR ME personally, and until someone PROVES that THEIR long-term system will generate more income as a percentage of trading capital than does my specific and uniquely designed day-trading system, then I’m perfectly happy to let them do their thing while I continue to do mine.
Am truly am happy you are doing well. Am not one that wants to argue or cause anyone else to get upset, we just chatting trading.
Actually, I can now make more in percentages in Long term based on R:R system, a great deal more, based on yearly basis on overall profitable outcomes. Even after spending over 90k hours of screen time as scalper or day trader and am very good at it, my R:R is inverse where I risk much more than reward, but since I lose seldom doing over 300 trades a week just in ES, won't be a factor unless I get 2 in a row and the averaging down gets me. No, big deal, spend next 2 weeks to make up and be making new equity highs.
Am curious Does your forex dealer generate the price? Are they mainly who you trading against?
But all that matters is we continue to make a ton of money, right?
Hope you doing it in your 401k and Roth?
Actually, I can now make more in percentages in Long term based on R:R system, a great deal more, based on yearly basis on overall profitable outcomes. Even after spending over 90k hours of screen time as scalper or day trader and am very good at it, my R:R is inverse where I risk much more than reward, but since I lose seldom doing over 300 trades a week just in ES, won't be a factor unless I get 2 in a row and the averaging down gets me. No, big deal, spend next 2 weeks to make up and be making new equity highs.
Am curious Does your forex dealer generate the price? Are they mainly who you trading against?
But all that matters is we continue to make a ton of money, right?
Hope you doing it in your 401k and Roth?
Most of y’all on this website are much more sophisticated than I. Half the time (or more) I don’t even know what you guys and gals are writing about.
Take the above post for example. I figured out (I guess) that R:R is a risk/reward system, but how someone for whom “winning percentages I have no value for me in trading" can be profitable if “my R:R is inverse where I risk much more than reward” is something I won’t even begin to pretend I could comprehend, not to mention what “averaging down” might be.
I’m just a simple guy. My strategy is little more than buy low and sell high, and try to be right just about all the time. My charts have nothing more on them than moving averages and moving average envelopes (and one or two lower panel oscillators I coded myself).
My current setup is so simple that a novice could simply glance at my charts and figure out when to buy and when to sell, which is why I no longer include pictures. (Images I posted in the past are not representative of the way my charts look now.)
Being so unsophisticated and all, I have no idea what “does your Forex dealer generate the price” refers to. I thought that currency pair exchange rates were due primarily to the activity of the world’s largest multinational banks and perhaps a few giant-sized hedge funds.
I also thought my goal as a retail trader ought not be trying to trade against anyone, but rather, to attempt to trade WITH the big boys (the above-mentioned market makers).
As for making a ton of money, that ain’t happenin’ yet, but if I’m patient, perhaps it will be happening in a year or two, God willing.
Well, I figure it out this way with people, I don't like most, don't care what they believe unless I get to know them years. But so long as someone has civil tongue, am happy to answer some questions as well as many of the other good traders on the site including broker @Robert Morse- very knowledgeable guy.
Last thing I would ever consider myself was "sophisticated" lol, am good with charting-started by hand in '78, but for most part for scalping/day trading I am counter-trend and know several traders done well using physics-just formulas-program it and becomes a cycles finder-add in rules of experience.
"risk/reward" is a part of a system, I call them "units" which falls into bigger unit called "Risk Management"-either longer term I tend to get risk as close to zero and on occasion have positive risk(will make something regardless of outcome) as I spent last eight years studying risk management mostly in longer term but today I hedged a day trade just before FOMC came out and did well.
R:R, for scalping which I have done for 31 years, till 18 months ago I never used protective stops, only using now as my newer systems getting programmed, have to have something for stops. My targets on half of my position are anywhere from 1-8 ticks, some systems I made to have high percentages of breakeven plus 1 tick profit on based on original entry, averaging down is when market goes against the direction I anticipate it should go based on much back testing of the past, so at certain ticks/points below my entry providing I am long, I add to the position, it might even be 4 or more points below my original entry, am doing what all the books and most of the experienced traders say not to do, and I agree 99.9% of traders should never do as I do. In Forex I would be adding up to 25 ticks against your original position, so I already know the percentages based by the week I will have 35-65% breakeven plus one tick trades, not on all the added levels, they too are all going for the areas of exit based on the original entry. So like a entry say 4 points was added below first entry, on breakeven exit, it will be exiting in area of the first exit- so making approx. 4 points. The reasons which are many of why target "BE+1" but either chart pattern has changed, trend change or time expired. I know exactly on 90% of profitable trades the ultimate amount of time to be allowed to seek profit targets, when only one of the rules is broken, targets are changed.
So if you are or get very good, backtest taking on more at better prices, I keep risk at same as original but the R:R changes on the added lots where some do become positive reward to risk.
Yea, I use to do much changing of oscillators, change them one parameter and changes quite a bit, but I been using one of them since 31 years ago and one I keep ticklering on cycles based on volume and price. I use 120sma also. Pretty large for a scalper, but I learned TA after I got decent with charting. I use fair amount of trendlines and patterns. One of my older systems uses 42H/L envelopes.
>>>>>>>>>>>>>>>>>>>.
This is how it was explained to me when Forex started, maybe @Robert Morse or someone who trades great deal of Forex can add to it or it been changed. I was told Dealers make the price as they are market makers of where your trading, so you never getting best price as he has to unload to make something to get rid of it, but he is watching inter-banks spreads so to never let it get too far away. Now on very large traders, chances are dealer will do a pass through of your order directly to interbank, all comes down to risk. I don't think it be legal for hedge funds to hand out anything, matter of fact they might alter data to increase an edge. I never considered market makers "big boys", but I guess some would. LOL, When Onada first opened, they had a problem when reports came out, they were like 1-2 seconds slow on pricing, I be watching futures markets and if whatever jumped huge, go the other way in Onada's currency, some nights I sleep between reports. They discovered their errors after some months though. But this is why USA won't allow us to trade overseas as many really cheat, huge slippage or gunning for stops as they all know where you place them and they control pricing.
http://forexop.com/learning/how-dealers-make-money/
Wow!