1:1 is not bad if you have over 75% winners over tons and tons of trades. You also have to factor in slippage and commissions which eat up most scalpers, especially on the futs. The truth is that most people would kill for a performace record like that. I stopped trading the ES because I couldnt get filled on limits and I am using direct connection to the exchange on an institutional platform..... I always had to have it trade through my price to get filled and always adding a tick or 2 of risk just to get in is not worth it IMO.
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R:R 1:1
- Thread starter skippy
- Start date
Quote from skippy:
So, that's why I say, when all is said-and-done, a 1:1 risk reward.
Comments? Criticisms?
Is this any way to make a living?
Nothing wrong with 1:1 risk reward. Lots of traders do quite well with it. Marty Schwartz does a lot of 1:1 risk reward "scalp" trades.
Goinglite
Quote from skippy:
Sometimes, however, I will stay in the trade even if it has met or exceeded that 1.25 mental stop, if the conditions that led me to enter the trade appear to be still valid -- i.e., if the conditions are such that I would enter the trade at that moment, if I hadn't entered earlier. In that case, I'll allow the trade a little additional room in which to work. How much room -- again, I let the conditions dictate. I can count on one hand (out of hundreds of trades) the number of times when conditions have led me to a hold a position that has moved adversely by two points or so. Last week, however, I found myself in the surprising, and unsurprisingly uncomfortable, position of holding through a four point adverse move. The position did, however, eventually move in my favor (my methodology kept firing re-entry signals in the direction of the existing trade), and I closed for 1.25 points profit, my max allowable profit.
So, that's why I say, when all is said-and-done, a 1:1 risk reward.
Comments? Criticisms?
Is this any way to make a living?
Hi Skippy
If you really have a 70% win rate, I'd tell you you have a decent shot at consistency. However, it seems that to get to your 70% win rate, you have to sit through adverse moves larger than 1.25 points as your method/conditions dictate... And therefore just based on this fact alone I don't think consistency is possible in the long run, because you will eventually hit the streak of big losers, that are much larger than 1.25pts, (you said you sat through 4pts of heat....for ex, whew) and in will dig yourself so deep a ditch that you'll likely find it very hard to climb out.
I would have endorsed your stats if you told me that you've studied your winners and losers and have a way to trail stops which allows your risk reward to be more fluid vs static. In fact, I would venture to say that the best traders have a fluid risk reward... it starts out with highest initial risk, but as the trade moves on that risk diminishes and if the reward target is unchanged, the R:R improves. So ideally, under your method, 50% of trades would be full wins of 1.25pts, 30% would be full losses of 1.25pts, 10% smaller wins than 1.25pts, 10% smaller losses than 1.25pts (or alternatively 20% b/e).
My advice would be to pull up the last 100-200 trades, and study your winners and if it's possible for you to reduce your initial risk on some trades (x%, in ex above, ~20%) and hence improve the overall risk reward. If you can't find a way to do that, odds are you'll be fresh kangaroo meat for them poachers in the ES.
Hope this helps.
Quote from Maverick1:
Hi Skippy
In fact, I would venture to say that the best traders have a fluid risk reward... it starts out with highest initial risk, but as the trade moves on that risk diminishes and if the reward target is unchanged, the R:R improves. So ideally, under your method, 50% of trades would be full wins of 1.25pts, 30% would be full losses of 1.25pts, 10% smaller wins than 1.25pts, 10% smaller losses than 1.25pts (or alternatively 20% b/e).
My advice would be to pull up the last 100-200 trades, and study your winners and if it's possible for you to reduce your initial risk on some trades (x%, in ex above, ~20%) and hence improve the overall risk reward. If you can't find a way to do that, odds are you'll be fresh kangaroo meat for them poachers in the ES.
Hope this helps.
Hey Maverick, thanks for this. I'm not sure I'm following, however. In fact -- sorry -- I've just read this a fourth time and I'm afraid I don't understand. Would you mind spelling it out for a complete idiot (i.e., me)? Thanks again.
Great post Maverick -- traders like you make these boards worthwhile. I've started reading all your previous posts and there is some amazing advice in there. Tx.
Quote from Maverick1:
Hi Skippy
If you really have a 70% win rate, I'd tell you you have a decent shot at consistency. However, it seems that to get to your 70% win rate, you have to sit through adverse moves larger than 1.25 points as your method/conditions dictate... And therefore just based on this fact alone I don't think consistency is possible in the long run, because you will eventually hit the streak of big losers, that are much larger than 1.25pts, (you said you sat through 4pts of heat....for ex, whew) and in will dig yourself so deep a ditch that you'll likely find it very hard to climb out.
I would have endorsed your stats if you told me that you've studied your winners and losers and have a way to trail stops which allows your risk reward to be more fluid vs static. In fact, I would venture to say that the best traders have a fluid risk reward... it starts out with highest initial risk, but as the trade moves on that risk diminishes and if the reward target is unchanged, the R:R improves. So ideally, under your method, 50% of trades would be full wins of 1.25pts, 30% would be full losses of 1.25pts, 10% smaller wins than 1.25pts, 10% smaller losses than 1.25pts (or alternatively 20% b/e).
My advice would be to pull up the last 100-200 trades, and study your winners and if it's possible for you to reduce your initial risk on some trades (x%, in ex above, ~20%) and hence improve the overall risk reward. If you can't find a way to do that, odds are you'll be fresh kangaroo meat for them poachers in the ES.
Hope this helps.