Pyramiding: Playing with the market’s money

[Sprout]

I seriously doubt that 100 skilled traders would fail to agree on that.

100 traders would operate on different timeframes.

A weekly view of an uptrend can have multiple countertrend days.

A countertrend day can be the start of a change in Dominance of the prior multi-day/weekly/monthly trend.

A change in Dominance in this countertrend day is first revealed on a 5min chart.

On a 5min chart, Dominance changes frequently in 3-5 bar combinations.

Since Dominance changes frequently on 5min charts, not every change in Dominance is the start of a trend that is seen on larger aggregations of time.

However the changes that ripple up through aggregations of time are seen on multi- timeframes as turns with coarser more filtered views occurring at one end of the observed spectrum and finer more detailed views at the other.

Like tuning into a radio station, any group of traders are attracted to ‘genres’ of music/talkshows that most resonates with their personality, temperament, resources, goals and lifestyle.

Although listening to multiple music stations at once can sound like noise, the cacophony can also sound like music to a trained and appreciative ear.

 

[lawrence-lugar]

Playing with the so-called "house's money" is a gambling and reckless mentality.

There's no such thing as the house's money. It's Your money, now. And you rightfully earned and deserved it. You risked your life for it, so to speak. It was you against the market at that duel moment.

No one can offer you concrete, good trading advice. -- Everything is ultimately your call, at that given moment in time.
...The market after all is part art, part science to trade...especially given the shorter the time frame you're looking at.

If you want to bet all in...then do it, I won't necessarily criticize you. If you want to bet 1% of your account, then do that.

To be a good trader, you have to be collectively wise about different facets of life.
Trading is like prison...it changes some men to form a different or multiple perspectives. -- While some men leave prison the same broken square inspite of all that given time spent and observed.

Make Trading Great Again 2018...High-Five`
I'm shopping for a new laptop on eBay. I'm currently using an 8 year old Thinkpad laptop.
I just drank a full pot of coffee and ate a cake the size of a kitten. Talk about support/resistance levels.

 

[Xela]

To allocate more toward a trade just because you are up for the day or week is not what I would do.

Neither would I, of course.

I don't let the outcomes of previous trades determine my stakes for future trades - there's no logic to that philosophy at all, for me.

But sometimes my technical analysis parameters will dictate re-entry into a still-running trade (and those tend to be my best-performing trades, by definition, otherwise the opportunity wouldn't arise while they were still running), so in that sense they're "separate trades". It's a slightly semantic point, perhaps.

"I have my edge and I exert it as often as qualifying opportunities to exert it arise" is how I look at it.

We disagree much less than I'd at first imagined, on reading your post above, anyway.

Thanks, Bob.

Is the quantitative idea that every new time point along the trend increases probability of next one being along the trend?

I don't think so, necessarily: because all trends come to an end at some point? Isn't that more to do with the strength and/or momentum of the trend than its duration?

 

[galvinlee888]

100 traders would operate on different timeframes.

A weekly view of an uptrend can have multiple countertrend days.

A countertrend day can be the start of a change in Dominance of the prior multi-day/weekly/monthly trend.

A change in Dominance in this countertrend day is first revealed on a 5min chart.

On a 5min chart, Dominance changes frequently in 3-5 bar combinations.

Since Dominance changes frequently on 5min charts, not every change in Dominance is the start of a trend that is seen on larger aggregations of time.

However the changes that ripple up through aggregations of time are seen on multi- timeframes as turns with coarser more filtered views occurring at one end of the observed spectrum and finer more detailed views at the other.

Like tuning into a radio station, any group of traders are attracted to ‘genres’ of music/talkshows that most resonates with their personality, temperament, resources, goals and lifestyle.

Although listening to multiple music stations at once can sound like noise, the cacophony can also sound like music to a trained and appreciative ear.

Simple story. Just let both camp look at the Dow Jones indices from yesterday using same chart, let say daily chart.

Trend Trader - Long. Buy High Sell Low.Win rate < 50% but with good risk/reward
Countertrend Traders - Short. Sell High Buy Low. Win rate > 50% but with bad risk/reward

Most of the ET traders are counter trend traders (and mostly are losers) in which I don't understand why they prefer this strategy. Most institutional traders are trend following.

 

[Bobbybax]

I can only surmise that there are very few scalpers on this board. I once cut my size by a factor of thirty for a week after a bad loss. Conversely, I'll size up when things are going well and I'm in the zone.

If you are always trading the same size without taking into account your performance or market conditions means you are either giving away money or not exploiting an advantageous setup.

 

[comagnum]

Novice traders will leverage their principal to the teeth.

Smarter traders leverage only their profitable position(s) - never their principal.

 

[tomorton]

Simple story. Just let both camp look at the Dow Jones indices from yesterday using same chart, let say daily chart.

Trend Trader - Long. Buy High Sell Low.Win rate < 50% but with good risk/reward
Countertrend Traders - Short. Sell High Buy Low. Win rate > 50% but with bad risk/reward

Most of the ET traders are counter trend traders (and mostly are losers) in which I don't understand why they prefer this strategy. Most institutional traders are trend following.

Good points mate.

I can only ask (again), who has made the money out of the US stock indices' trend since 2009, the trend-followers or the reversal chasers?

 

[ironchef]

Agreed. I’m not talking about adding to a good trade or scaling in. That all should have been part of your plan. I’m taking about exceeding your limits just because your are up money.

If my limit is long/short 5 ES future’s, I should not do a 10 lot even with a short stop just because I just made $2500, in my other example.

There is no reason why we all have to agree on this. I was always a very conservative Trader. That’s why today I’m not rich and retired in Florida. It’s also why I’m not broke living with my parents. When I look at the X traders that I know there is a much higher percentage of them that are broke today. Risk management. Proper trade size to my account. Hitting lots of singles and doubles and never going for home runs.

To me this is the way to run a business that survives and thrives over the long run.

Intuitively what the other folks said make sense to me. As uncle Buffett said: When you see a fat pitch, you don't bunt.

Keep adding, when you are in a "cannot lose" situation, seem the correct thing to do? Worst that can happen is you get stop out somewhere along the line with profits, then you call it a day.

What am I missing?

 

[Robert Morse]

Buffett is not a trader, he is a long term investor. He buys blocks of stock over time and is happy in the short run when that stock goes down because he gets to buy his next block at lower prices.

 

[Overnight]

...

Keep adding, when you are in a "cannot lose" situation, seem the correct thing to do? Worst that can happen is you get stop out somewhere along the line with profits, then you call it a day.

What am I missing?

You're missing the fact that as you scale in or out, every move for or against you moves in that exponential fashion. Your $10 per tick move become $20 or $30. Or $50. As you scale in/average down each per-tick move becomes more prevalent. It is rough to experience. Don't do it unless you are well-heeled.