Position Sizing
- Thread starter peregrinecap
- Start date
I don't believe your numbers but they may be true. You see, 9/9 wins in trends and 6/7 (not counting 0s) wins in choppy markets doesn't make any sense if you are a trendfollower as you say.
Then, in your first sequence, digits 2 and 5 have an unusual frequency of appearence, not justifiable by statistical evidence.
You are correct about that 1st sequence; I see that I accidentally typed +21 twice in a row at the start, when in fact it should've been a single +21 trade.
Are you saying that in a one-way directional price swing of 250 ticks from top to bottom, it's statistically unjustifiable for an experienced scalper to extract 200 from the move, considering that every trending move has small pullbacks that allow for re-entry at a better price?
Yes, I am saying that and unless you can produce actual audited brokerage statements that show that, there is no reason for anyone to believe you. I have rarely seen people in forums make such claims, even if they are capable of achieving that. Extracting 200 ticks out of a 250 tick trend via 9 or 10 trades is a hard to believe story by any realistic measure. If you have, itâs good for you, but we will not just take your word for it.
he's sayin u made up those numbers. and in a 250 tick move, it's entirely realistic if you're trading using pullbacks and targets. example: u get in at price 1, price moves from 1 to 10, u get out at 8. price moves back to 5, turns around and u get in at 6, price goes to 20, u get out at 18. u get 19 pts out of a 20 pt move. and that's the most simplistic way. it doesn't even count holding on to all of your trades or even entering countertrend trades. theoretically, one could make more than the entire move from bottom to top. tx for ur posts, nodoji. you're far too kind to spend time answering people like this. if u don't like her answer, shove off and move on
Audited statements won't help anyone trade. Rather than continue to post here off-topic, visit CL Redux for another example of precision price action scalping concepts:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=178741&perpage=10&pagenumber=3112
Hi No Doji,
As an EOD swing trader, (Day Job) (hourly charts) I have for years applied a position sizing approach that indeed has kept me from becoming my own worst enemy. Your comments about enabling an analysis of the larger mkt condition using the tick count suggests that you likely do an instinctive analysis of the mkt condition and likely modify your trade approach based on how you perceive the mkt condition- I would expect that you likely either choose to stand aside or take a reduced entry size in times of chop- A somewhat instinctive form of modifying a position sizing approach if one uses TA criteria as an entry .
"I keep a spiral bound notebook in front of me, jot down entry time/avg price and exit time/avg price and at the close of each trade I note the # of ticks profit or loss. These are very small numbers (i.e., +21, -14, +30, -7, +1, +1) and so it has no irrational influence on my trading. This way I can ascertain at-a-glance when the trading is getting choppy, when a trending move is showing signs of reversing, and when the time of day is resulting in diminishing opportunity, just by seeing the tick totals in isolation from actual P/L."
Some traders trade mechanically, believing in their approach, and take each trade that meets certain criteria. However, some trade more instinctively depending on the feel of the mkt conditions at the time-
I would put myself in that category- I tend to cut my position size - usually by 50% on entry where i feel the mkt is choppy and take a quick loss or profit if the trade turns direction on me .
I will add to the position if I get 3-4% above BE.
In trending mkts- such as we seem to have now, I'm giving a bit more room to stops, and once the trade is in net profitible territory, I drop back to a daily chart - and try to allow the trade some room to run, splitting the stop- All above BE.
While our time frames are different, I believe you may indeed be the "instinctive" type of trader, that targets the most opportune type of setups within the larger framework. Your "tick count" is a pulse on the market at that moment- Gives you a sense of what the larger environment is doing directionally, and you assess that direction probability and it causes you to make a decision on how you approach the next trade-
You likely do this as a reflex action or instinctively- putting better probabilities of a trade's success in a better flow- of the mkt's direction.
My questions are several fold- Day traders have to react within the micro environment- I make the assumption you are a day trader- I don't know if you hold overnight? MKT trend on the larger time frame would be a more critical assessment to make that holdover.
I assumed you take the tick assessment and likely restrain yourself from taking trades unless they look favorable for your approach- This is indeed a critical component of trading- trade with the trend that supports you. Do you alter your position size based on changing mkts? i CERTAINLY DO- I reduce my position size by 50% if I'm taking a "tenative" trade, and I take a stop at a much tighter level if the trade fails to perform as expected..
I think the Ghost post on position sizing was on the mark with his risk assessment of .05% on trades -under the 70% mark The learning trader should first learn to trade his approach- with a very tight Risk - and build from there.
I think you likely are a trader that has developed an instinct for the mkt condition and adapts to that. That only comes with experience
The ability to adapt and evolve with a changing mkt is what challenges us all.
How would you guide the novice trader in terms of position sizing their starting account? What would you tell them so they could survive the learning curve? What would you tell them when it is time to step aside? When is it a good time to go all in?
Your answer will likely be- you will only know this with experience-over time-and repeated market swings.
So, How do you take the novice trader , and keep him/her from totally blowing out their account and survive for the longer term gain?
Position sizing is the answer for the learning curve IMO- How do you apply it as the mkt conditions change? How would you guide the initiate trader so they could survive?
I think your answers , and your experience, would be most beneficial.
I don't know that you can put that into exact terms that are both here today as well as tomorrow, but it's wortth a shot-
Consider that the guy/gal that started this thread has x NUmber of trades remaining before he loses belief in him/her self as being able to do this trading thing- What do you tell them to keep them surviving past the learning curve?
While I ask these questions, I continue to do my own thing, however, I think your experience in trading and adapting to mkts would be beneficial to all.
Thanks for sharing-SD
As an EOD swing trader, (Day Job) (hourly charts) I have for years applied a position sizing approach that indeed has kept me from becoming my own worst enemy. Your comments about enabling an analysis of the larger mkt condition using the tick count suggests that you likely do an instinctive analysis of the mkt condition and likely modify your trade approach based on how you perceive the mkt condition- I would expect that you likely either choose to stand aside or take a reduced entry size in times of chop- A somewhat instinctive form of modifying a position sizing approach if one uses TA criteria as an entry .
"I keep a spiral bound notebook in front of me, jot down entry time/avg price and exit time/avg price and at the close of each trade I note the # of ticks profit or loss. These are very small numbers (i.e., +21, -14, +30, -7, +1, +1) and so it has no irrational influence on my trading. This way I can ascertain at-a-glance when the trading is getting choppy, when a trending move is showing signs of reversing, and when the time of day is resulting in diminishing opportunity, just by seeing the tick totals in isolation from actual P/L."
Some traders trade mechanically, believing in their approach, and take each trade that meets certain criteria. However, some trade more instinctively depending on the feel of the mkt conditions at the time-
I would put myself in that category- I tend to cut my position size - usually by 50% on entry where i feel the mkt is choppy and take a quick loss or profit if the trade turns direction on me .
I will add to the position if I get 3-4% above BE.
In trending mkts- such as we seem to have now, I'm giving a bit more room to stops, and once the trade is in net profitible territory, I drop back to a daily chart - and try to allow the trade some room to run, splitting the stop- All above BE.
While our time frames are different, I believe you may indeed be the "instinctive" type of trader, that targets the most opportune type of setups within the larger framework. Your "tick count" is a pulse on the market at that moment- Gives you a sense of what the larger environment is doing directionally, and you assess that direction probability and it causes you to make a decision on how you approach the next trade-
You likely do this as a reflex action or instinctively- putting better probabilities of a trade's success in a better flow- of the mkt's direction.
My questions are several fold- Day traders have to react within the micro environment- I make the assumption you are a day trader- I don't know if you hold overnight? MKT trend on the larger time frame would be a more critical assessment to make that holdover.
I assumed you take the tick assessment and likely restrain yourself from taking trades unless they look favorable for your approach- This is indeed a critical component of trading- trade with the trend that supports you. Do you alter your position size based on changing mkts? i CERTAINLY DO- I reduce my position size by 50% if I'm taking a "tenative" trade, and I take a stop at a much tighter level if the trade fails to perform as expected..
I think the Ghost post on position sizing was on the mark with his risk assessment of .05% on trades -under the 70% mark The learning trader should first learn to trade his approach- with a very tight Risk - and build from there.
I think you likely are a trader that has developed an instinct for the mkt condition and adapts to that. That only comes with experience
The ability to adapt and evolve with a changing mkt is what challenges us all.
How would you guide the novice trader in terms of position sizing their starting account? What would you tell them so they could survive the learning curve? What would you tell them when it is time to step aside? When is it a good time to go all in?
Your answer will likely be- you will only know this with experience-over time-and repeated market swings.
So, How do you take the novice trader , and keep him/her from totally blowing out their account and survive for the longer term gain?
Position sizing is the answer for the learning curve IMO- How do you apply it as the mkt conditions change? How would you guide the initiate trader so they could survive?
I think your answers , and your experience, would be most beneficial.
I don't know that you can put that into exact terms that are both here today as well as tomorrow, but it's wortth a shot-
Consider that the guy/gal that started this thread has x NUmber of trades remaining before he loses belief in him/her self as being able to do this trading thing- What do you tell them to keep them surviving past the learning curve?
While I ask these questions, I continue to do my own thing, however, I think your experience in trading and adapting to mkts would be beneficial to all.
Thanks for sharing-SD
I am mainly trend trader in Crude Oil, but I focus on Scalping as far as my entries, 25 years of S&P/ES experience, and very structured counter-trend trading. I trade in groups of five as I have three targets and exits are 60%, 20% and 20%, over backtesting and real time trading of five years, I nail first targets 55% of the time and 15% of the time are losers, the other 30% is less than first target small profits. My goal is unlike many others of making the most profits, I focus my goals on not having losing trades cause I average down on each trade, I may risk 2-8 ticks, but each tick against me I am adding more. I found if I am not going to be losing often, even on trades where I make one tick, cause market went back five ticks, I get six ticks on last position.
And what I often do after I have a loss, is do 80% profit taking at first target to help ofset the loss depending on how much I lost. Since the mean is two losing trades in a row going over 3,000 trades, I can increase contract size to double to help offset loss, but my way of trading can take a few days to make up for drawdowns, but over all, it is very benefit. I will have a few occurences of 100 tick profit targets reached a week, but majority of profits is 55% first targets.
I bet NoDoji will be adding on each price level or every other one pretty soon. Of course the trick is not having too large of a position to cause one's own slippage.