For a random entry, what's the chance that it will make twice the amount risked (ignoring the spread for the moment)?
Pete's Place
- Thread starter PetaDollar
- Start date
I'm getting a 33.3% chance.
and 25% chance to make 3x risk.
So if an entry method gives you those %ges, you are doing well because you are beating the spread. Higher %, then of course you are doing really well with your entries.
Another test
"Resiliency"
For random entries, if the trade intially goes against you, then of course your chances get even worse. But supposing you just bought at support; then a small move against you, that does not break the support, should not hurt your chances like it would with a random entry.
So if an entry method gives you those %ges, you are doing well because you are beating the spread. Higher %, then of course you are doing really well with your entries.
Another test
"Resiliency"
For random entries, if the trade intially goes against you, then of course your chances get even worse. But supposing you just bought at support; then a small move against you, that does not break the support, should not hurt your chances like it would with a random entry.
Hi Prter just some observatiions on your chart for the 30th.
You had told me that you draw the blue lines based on the range established in the first few hours og trading so that means that the reject trader will only work on range days but I guess you are aware of that.
In looking at the chart there was 4 tests of your upper blue line before it broke through on the 5th then it came back down thriugh your line and setting up your short. Having those tests and the failure made for a very strong short. and the increasing volume after the rejection should have allowed you to stay in the trade or at least take partials.
Also looking at the chart using those lines as support and resistance three good trades (short, long, short) from noon.
I also noted on your journal that you have a daily pivot calculator there. Have you tried using those lines for this setup? Maybe you could put them on the chart in another color and see how it works out.
bobdec
You had told me that you draw the blue lines based on the range established in the first few hours og trading so that means that the reject trader will only work on range days but I guess you are aware of that.
In looking at the chart there was 4 tests of your upper blue line before it broke through on the 5th then it came back down thriugh your line and setting up your short. Having those tests and the failure made for a very strong short. and the increasing volume after the rejection should have allowed you to stay in the trade or at least take partials.
Also looking at the chart using those lines as support and resistance three good trades (short, long, short) from noon.
I also noted on your journal that you have a daily pivot calculator there. Have you tried using those lines for this setup? Maybe you could put them on the chart in another color and see how it works out.
bobdec
Actually i'm not limiting it to "range days". Anytime there is a range with 3 total tests for at least an hour, then i'll draw the lines.
I draw S2 though R2 on my charts every day, but they haven't come into play for Reject Trader yet.
Here's Reject Trader's entry rules:
(1) Wait for a min 1 hr trading range to form, defined by at least two failures on one side, and one failure on the other.
(2) Wait for a breakout, followed by at least 10 min of trading outside this range, followed by a return to inside the range
(3) Enter opposite the original breakout. Safety stop is a tick past however far the failed breakout went. "Confirmation" is a a breakout of the first 5 min bar that trades back inside the range.
When you buy at support you do two things that are positive:
First you enter at a relatively better price than if you were buying at resistance, for example. And because we are talking about this from the point of view of the index futures, which are prone to retrace, your odds of catching a favorable wave are higher in buying at support than buying at resistance, from a pure positioning standpoint. This observation is proved out when calculating win percentage of breakout systems versus win percentage of retracement systems.
Second you get the impact of other traders who also enter at or around support, which tends to create the self-fulfilling prophecy of a support level holding. The level holds, because those who believe it will "hold" buy at this level, propelling price up off from it.
So by these two arguments buying off from a support level, particularly a well-known support level improves the odds of catching a favorable move to better than random. At least they tend to improve the win percentage, but this doesn't necessarily improve the risk/reward ratio.
Bob, I have placed a total of five paper trades with Reject Trader, over three days. I haven't even tried it with real $$ yet. I hope by "try them out" you mean "paper trade."