Reversal or Breakout

[jones247]

There are several "gurus" that subscribe to the opening range breakout strategy; however, I'm also familar with several professional proponents of RTM (i.e. open order/OPG) strategy.

Based upon your experience or studies with index futures, what do you believe is most likely to occur after the 1st 15 - 30 minutes of the market opening, (1) a reversal of at least 5 -7 points from the s/r levels, or (2) a breakout of at least 5 - 7 points from the s/r levels?

thanks,

Walter

 

[HiF trader]

random

 

[wrbtrader]

Quote from jones247:

There are several "gurus" that subscribe to the opening range breakout strategy; however, I'm also familar with several professional proponents of RTM (i.e. open order/OPG) strategy.

Based upon your experience or studies with index futures, what do you believe is most likely to occur after the 1st 15 - 30 minutes of the market opening, (1) a reversal of at least 5 -7 points from the s/r levels, or (2) a breakout of at least 5 - 7 points from the s/r levels?

thanks,

Walter

You can't consistently predict reversal or breakout via that type of TA strategy all by itself because there's other important inputs. Therefore, based upon the information you have only provided...the prediction of reversal or breakout will not show an edge involving index futures.

The following are just a few things that have impact out of many:

* Volatility Level

* Type of s/r level or zone being used

* Reversal or Breakout occurring at/near a key market event

* Price action definition of a reversal or breakout

Mark

 

[jones247]

You may very well know that it doesn't take much more than a 50% win ratio to be very successful. As Steve Cohen, the billionaire said, most of his traders only win about 53% of the time, and his best trader only wins 63% of the time. Fundamentally, if you can create a scenario that has only two mutually exclusive possibilities, then that alone can become an edge. Unfortuneately, many constantly change the variables associated with their trading system/strategy, as well as add multiple facets to their trading system/strategy. In an attempt to "refine" or "improve", one ultimately discovers that complexity and win rate are not necessarily correlated. Actually, one's win rate should statistically decline, because of the multiple facet/variable aspect of a more complicated system/strategy.

Simplicity is best, especially if it reduces the potential outcome to only two possibilities.

Walt

 

[wrbtrader]

Quote from jones247:

You may very well know that it doesn't take much more than a 50% win ratio to be very successful. As Steve Cohen, the billionaire said, most of his traders only win about 53% of the time, and his best trader only wins 63% of the time. Fundamentally, if you can create a scenario that has only two mutually exclusive possibilities, then that alone can become an edge. Unfortuneately, many constantly change the variables associated with their trading system/strategy, as well as add multiple facets to their trading system/strategy. In an attempt to "refine" or "improve", one ultimately discovers that complexity and win rate are not necessarily correlated. Actually, one's win rate should statistically decline, because of the multiple facet/variable aspect of a more complicated system/strategy.

Simplicity is best, especially if it reduces the potential outcome to only two possibilities.

Walt

Walt,

Very true and let us know how the method works (makes or doesn't make you money) as simple as it is without any adjustments or changes in the variables.

Mark

 

[Cheese]

For the lone amateur trader with limited capital winning on 53% or 63% of entries is insufficient to be successful. Translated this means that 4 or 5 times out of 10 your entries fail and produce losers.

The point of adopting or devising a reliable methodology for day trading is to have entries you can rely on. You go where the points are: the intraday gyrations, the swings up and down that occur between the open and the close.

You want to take as much as you can from each swing and it is your methodology which gives you your triggers for your buys and sells.

 

[Swan Noir]

Walt,

Can I assume the edge in this bipolar approach is that , for those that excel at trade management, they can push all (or nearly all) of the variability toward their strength?

 

[jones247]

With either option being equal or nearly equal in probability of outcome, then it's all about risk/trade management...

Walt

 

[Swan Noir]

Yes, of course.

Quote from jones247:

With either option being equal or nearly equal in probability of outcome, then it's all about risk/trade management...

Walt

 

[GG1972]

Quote from Cheese:

For the lone amateur trader with limited capital winning on 53% or 63% of entries is insufficient to be successful. Translated this means that 4 or 5 times out of 10 your entries fail and produce losers.

The point of adopting or devising a reliable methodology for day trading is to have entries you can rely on. You go where the points are: the intraday gyrations, the swings up and down that occur between the open and the close.

You want to take as much as you can from each swing and it is your methodology which gives you your triggers for your buys and sells.

disagree with your 1st point but agree with yr last point. Over past 2-3 years and over several hundreds of trades here is the break down

Stopouts 18%

Breakeven (these include trades that went no where, mistakes made-this one I shouldve seperated from others, trades that started to go my way then came back to stop breakeven) 43%


Winners 39%
Avg winner 3.9L (3.9 times of an average loser)This is partly skewed from earlier times when winners were smaller.


In all this the thing that suprised me most is the amount of breakeven stops - when I first started trading I always thought in terms of winners or losers, never in term of breakeven stopouts.

Two things an average trader should try to do is bigger winner relative to losers and more of them. Seems obvious but over time with tighter entries and a lot of screen time its pretty much possible.