Predicting intraday price movement
- Thread starter vedanta
- Start date
You should send Cheese an email or pm to ask for an explanation since he's the author of that statement.
You should also ask your friend (the other trader you mention) for an in-depth explanation of his methodology.
I can't imagine why he would say no unless your talking about an online acquaintance and not a personal friend.
Simply, go straight to the source because our interpretations may be completely incorrect or partially correct which means you'll be wrong on some stuff.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Have sent Cheese a PM but no reply yet, would still be interested in any comments anyone has on his post, also why not more interest in what he is saying ? Someone is claiming to be able to predict intrday price movement, I suppose most do not believe it is possible, but still always good to consider new ideas ?
Quote from glassinc:
I don't understand you expectancy equation, could you explain please. In the first example, how could you have an average loss of $1000 if you limited risk is $100?
Does this assume that at one time you could have a 10 losing trades in a row? Am I getting it or not? This looks like a very good proposition to me, a 1:1 R to R with a 90% win probabililty. If I don't get it please set me straight.
Dan
yes, that is basically what he is saying
given sufficient "n" (number of samples, in statistical parlance), even a system that wins 90% of the time can (and will) have 10 losses in a row.
that, among other reasons , is why position sizing/risk management is SO SO SO important
my trading (YM) overall, has 81% win percentage.
however, different setups i use have different ratios. that is just overall.
my risk/reward is NOT 1:1 however. i trade multiple contracts, and my max loss (stop level) on most setups is slightly larger than the first target for selling. (like one setup i use sets a 10 pt stop, and a 6 pt then a 10 pt target for scaling out)
overall, this still results in much greater win $$$ than loss $$ but you have to have the temerity to stick with your setup;/system because the law of averages say that even a 90% win ratio (very high btw) will have many losses in a row over many trades
what i do is set a discipline rule where I am DONE if I get three losing trades in a row. and as soon as i get two losing trades, i cut my size in 1/2. this #1 keeps me disciplined (if i know i can't trade if i lose on the next trade, i won't chase or make a dumb trade) and #2 prevents big loss days, which are psychologically damaging etc.
given sufficient "n" (number of samples, in statistical parlance), even a system that wins 90% of the time can (and will) have 10 losses in a row.
that, among other reasons , is why position sizing/risk management is SO SO SO important
my trading (YM) overall, has 81% win percentage.
however, different setups i use have different ratios. that is just overall.
my risk/reward is NOT 1:1 however. i trade multiple contracts, and my max loss (stop level) on most setups is slightly larger than the first target for selling. (like one setup i use sets a 10 pt stop, and a 6 pt then a 10 pt target for scaling out)
overall, this still results in much greater win $$$ than loss $$ but you have to have the temerity to stick with your setup;/system because the law of averages say that even a 90% win ratio (very high btw) will have many losses in a row over many trades
what i do is set a discipline rule where I am DONE if I get three losing trades in a row. and as soon as i get two losing trades, i cut my size in 1/2. this #1 keeps me disciplined (if i know i can't trade if i lose on the next trade, i won't chase or make a dumb trade) and #2 prevents big loss days, which are psychologically damaging etc.
Cheese is in a place where he says what you quoted.
What is possible and what is going on may be a different story. It is for me.
The daily range is a value that just represents a portion of what the potential of the market offers you.
At a certain point in the day you have banked the amount that the daily range turns out to be. At anther point in the day another such amount is banked. As the day progresses you find out how much more you are going to bank and finally the daily range becomes a matter of record.
One of the best estimating tools for this is to check your trading account at a few given times of the day. Each successive check is a little more accurate.
It looks like to me that cheese is connecting something or other to the daily range for some reason or other. The connection between extracting what is available on a daily basis is only secondarilyrelated to the eventual daily range that appears.
It may be that cheese feels that there is some relationship to predicting and making money. There isn't.
One basic hard hitting concept is that you have to be in the market to make money while price is changing. The caveat associated with this is to always be on the right side of the market. The ends of the daily price range are two significant points where a trader is active (taking appropriate actions) to assure that he is on the right side of the market for the near term future after any extreme has been established.
most given prices during the day are hit several times and, always, you will be owning a position building profits. You only collect profits by specific actions 20 to 40 times a day. The daily range, within which all of this happens, is rarely being stretched for a significant amount of time of the day. You always collect profits at the end of each stretching period and it always very evident as this is happening.
All of the above is different than the common entering and exiting mentality. In ET most palaver is about entering and exiting. there are not many significant good rules for this sort of thing. On the otherhand there are significant rules for making money. Making money has to do with being in the market continually and being on the right side of the market at that time. Market daily range does not come up as a factor in this stuff to any extent.
Trading through the day is like being in a sailboat race. When the race begins you stay in the boat and follow the course always making best use of which way the wind is blowing. It is true the length of all races is known by ruling the distance between the points. No one goes that distance, however. It is just there and not a concern. What is important is to know how and when to tack to get the most for the time available to win. the time available is determined when the race is over (Except in Maine).
My reading of cheese is that he doesn't race. He gets in his boat for a while and then stops and gets out to watch a lot.
When you start looking at trading as a way to make money, you will begin to consider how to get rich. Most of ET is about being right rather than being rich. The daily range stuff is about being right. Being rich is about getting in the boat, knowing how the wind is blowing (tides too), getting around the marks and how to sail the given boat you are in. In getting rich you pass the daily range several times a day as profits accumulate in the appropriate segments. None of the segments is the daily range but only part of it.