Questions for experienced daytraders
- Thread starter CheckM8t
- Start date
example: ten trades per day in CL, -20 cent initial stop seeking +100 cents profit objectives break down like this:
5 stopped at 0 cents
3 stopped at -20 cents each (-60 cents)
2 stopped at +100 cents each (+200 cents)
net result: 20% "win rate" and +$1,400 per contract on ten round turns
there's your statistical analysis from your own preferred trading symbol in today's current market environment
Commissions are not your only transaction cost.
Quote from austinp:
example: ten trades per day in CL, -20 cent initial stop seeking +100 cents profit objectives break down like this:
5 stopped at 0 cents
3 stopped at -20 cents each (-60 cents)
2 stopped at +100 cents each (+200 cents)
net result: 20% "win rate" and +$1,400 per contract on ten round turns
there's your statistical analysis from your own preferred trading symbol in today's current market environment
Why not say:
"2 stopped at +1000000 cents each (+2000000 cents)"
Same logic.
Here's my 2 cents:
Don't trade unless you're pretty sure that you're going to make money. And then stay in it until you're pretty sure you're going to lose money. Maybe be more skittish about jumping out...first sign of trouble and you're out.
"Pretty sure" should be about 90% system, and 10% gut feel.
Why do I say this? Because you either have an edge or you don't. If you don't, no manipulation of the size of your bet is going to help you. And if you do have an edge, then why on earth wouldn't you want to get all the benefit of it?
IMHO, you should be all in when you get in and when you get out, get out. Manipulation of the odds comes from your system.
But last of all...play an amount that is right for the all in, all out, strategy.
You could come up with a cash handling strategy on a coin flip. Like with 50/50 odds, when you lose, double the next bet to get your money back. They look good on paper, but eventually, such strategies will end up blowing out your account because eventually you'll be in a position of betting half your funds to win back a little bit of money. The cash handling strategy can't help you because the win percentage isn't high enough...so find a system that wins more than 50% and then play it as often and as much as you can.
I'm open to hearing anyone refute my statement here. Explain to me how parsing a winning strategy makes sense or how you can parse a losing strategy to success through money management. Seriously, I'm open to hearing it. I do get that profitability is win percentage times return on a win vs. loss percentage times return on a loss (i.e, 30% of the time you double your money and 70% of the time you lose half....that is not what I'm talking about). I'm saying if you have a edge...say a situation wehre you'd make more money winning than losing, why would you want to water it down at any point? Sorry for the rant, and I hope I'm not hijacking here, but I'd really love an intelligent answer....it might help me be a better trader.
SM
Don't trade unless you're pretty sure that you're going to make money. And then stay in it until you're pretty sure you're going to lose money. Maybe be more skittish about jumping out...first sign of trouble and you're out.
"Pretty sure" should be about 90% system, and 10% gut feel.
Why do I say this? Because you either have an edge or you don't. If you don't, no manipulation of the size of your bet is going to help you. And if you do have an edge, then why on earth wouldn't you want to get all the benefit of it?
IMHO, you should be all in when you get in and when you get out, get out. Manipulation of the odds comes from your system.
But last of all...play an amount that is right for the all in, all out, strategy.
You could come up with a cash handling strategy on a coin flip. Like with 50/50 odds, when you lose, double the next bet to get your money back. They look good on paper, but eventually, such strategies will end up blowing out your account because eventually you'll be in a position of betting half your funds to win back a little bit of money. The cash handling strategy can't help you because the win percentage isn't high enough...so find a system that wins more than 50% and then play it as often and as much as you can.
I'm open to hearing anyone refute my statement here. Explain to me how parsing a winning strategy makes sense or how you can parse a losing strategy to success through money management. Seriously, I'm open to hearing it. I do get that profitability is win percentage times return on a win vs. loss percentage times return on a loss (i.e, 30% of the time you double your money and 70% of the time you lose half....that is not what I'm talking about). I'm saying if you have a edge...say a situation wehre you'd make more money winning than losing, why would you want to water it down at any point? Sorry for the rant, and I hope I'm not hijacking here, but I'd really love an intelligent answer....it might help me be a better trader.
SM
Funny how a somewhat well-worded question can still get quality responses on ET.
I have a different take on the matter. The answer depends on trading style first and foremost so you can all argue until you're blue in the face but it's not going to matter. With reversion trades you usually add to losers, and to breakouts you usually add to winners. Usually is the key word.
There is a level of comfort for every trader. If you want to boil it all down to numbers, that is different than what is best for you as a trader unless everything is going to be auto. Putting on full size will usually put you through more pain than not, but it may pay more in the end.
For myself, I'm mostly a manual trader, and in it for the long run so I scale as described above. I trade much bigger in breakouts though. Reversion trades are10x more dangerous, but often 5x more profitable so you decide what's best for you.
I have a different take on the matter. The answer depends on trading style first and foremost so you can all argue until you're blue in the face but it's not going to matter. With reversion trades you usually add to losers, and to breakouts you usually add to winners. Usually is the key word.
There is a level of comfort for every trader. If you want to boil it all down to numbers, that is different than what is best for you as a trader unless everything is going to be auto. Putting on full size will usually put you through more pain than not, but it may pay more in the end.
For myself, I'm mostly a manual trader, and in it for the long run so I scale as described above. I trade much bigger in breakouts though. Reversion trades are10x more dangerous, but often 5x more profitable so you decide what's best for you.
Quote from austinp:
example: ten trades per day in CL, -20 cent initial stop seeking +100 cents profit objectives break down like this:
5 stopped at 0 cents
3 stopped at -20 cents each (-60 cents)
2 stopped at +100 cents each (+200 cents)
net result: 20% "win rate" and +$1,400 per contract on ten round turns
there's your statistical analysis from your own preferred trading symbol in today's current market environment
Great theory in it?
Thanks for the reply. I do get that you shouldn't add to a losing position...but I don't get why anyone would delay adding to a winner.
Lets say you were playing the ES, and you bought one contract at 1400, at 1401 it was looking good so you add another contract, and at 1402 things started turning sour so you sold.
So you earned 2 pts on one contract and 1 point on the second....for a total of 3 points. But you could have earned 4 from jumping in there from the beginning. The win was watered down.
And arguably, the second contract is riskier because you're buying in later in the run...there are less ticks to go before it reverses, right? So you're ramping up risk.
What am I missing?
SM