I was thinking of that...for now, though, I'd like to propose minimizing "x-factors" like trade management. Keep the variables down to a minimum so we can see how the core concept delivers over time. If it is valid, a 2:1 reward/risk should make it profitable. Once that has been established, then tweak and customize to your heart's content.
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Rule of 10 Journal
- Thread starter jagmot
- Start date
I was thinking of that...for now, though, I'd like to propose minimizing "x-factors" like trade management. Keep the variables down to a minimum so we can see how the core concept delivers over time. If it is valid, a 2:1 reward/risk should make it profitable. Once that has been established, then tweak and customize to your heart's content.
Quote from jagmot:
I'm bored of all the critics of Rule of 10...so I'm going to papertrade Rule of 10 to show it can be traded on a profitable basis. For journal/papertrading purposes, I will be using 1 contract.
Here are the rules I am going to use when trading
1 contract (so obviously no scaling out)
3 pt stop
10 pt target
No trailing stop (either target is hit or stopped out at initial 3 pt stop)
If stopped out twice in a row, done for the day and will wait till next day before entering a new order.
Today's high is 1291.75
Market is currently at 1281.75
Long 1 contract at 1281.75
Target 1291.75
Stop 1278.75
Trade stopped out.
0 for 1
-3.25 ES Points (I will be using .25 for average slippage and commissions)
I'm going to post as real time as I can, however I am papertrading this while I am trading my own strategies (real money) so in the morning sometimes I will not be able to post.
Once the trade got stopped out at 8:30AM EST, I start looking for the next r10 signal. In this case, I would looking to get short at 1286.75 (which did not hit). Then the market moved as low as 1271.25. Now the signal would be 1281.25 short which should have been taken at 10:20AM EST.
(Edit: As you can see some people called out the short of 1281.25 in advance even though I was not)
Short 1281.25
Stop 1284.25
Target 1271.25
Jagmot
I will do my best to post real time, however I have to sleep and trade my real money strategies (with a lot of work being done in the open)
(Edit: As you can see some people called out the short of 1281.25 in advance even though I was not)
Short 1281.25
Stop 1284.25
Target 1271.25
Jagmot
I will do my best to post real time, however I have to sleep and trade my real money strategies (with a lot of work being done in the open)
Quote from joeyata1:
the problem with the rule of 10 concept has been the line in the sand has constantly changed. for instance some people have used a 24hr running period to take entries when it suites them and at other times the rule of 10 has been based on intraday or some type of reaction lows. the rules have changed constantly to make it always look right. if changing the rules works for one thats fine but then it becomes that persons own trading style and not a firm rule most can use. for instance few stay up 24 hrs a day so use 24 hr periods make it tougher to follow. and many times the rule of 10 might now work so then you move to rule of 20 and on and on. and what are ones stops off the rule of 10? 2 pts? 3 pts? are you doing this on market hrs are 24/7? what are your stops/ what are your profit targets? i'll be interested to see how this works out
I think the real problem with r10 is managing the trade in a journal setting. Look at the first trade, the trade went more then 8pts in favor, but because of the rules, the trade was stopped out for a 3pt loss.
I'm using these simple rules as I believe you can still make money. If I was not papertrading, I could hard code some management such as trailing a stop up to breakeven once we hit +3 and trail from there.
Quote from jagmot:
I think the real problem with r10 is managing the trade in a journal setting. Look at the first trade, the trade went more then 8pts in favor, but because of the rules, the trade was stopped out for a 3pt loss.
I'm using these simple rules as I believe you can still make money. If I was not papertrading, I could hard code some management such as trailing a stop up to breakeven once we hit +3 and trail from there.
Quote from tomahawk:
... 10 point moves off ROT are the exception. You need a much smaller target for just 1 contract. If you are scaling out on multiples that's a different story.
Quote from trader_arb:
This journal is going nowhere because:
-If you are incorrect, everyone will say it doesn't work.
-Even if you are correct, you will most likely post your exit after the market has reversed and everyone will say it worked in hindsight and therefore doesn't work (See ES journal).
No scaling in/out is going to kill you when the market goes +9.5 points or you don't have a perfect entry. Also, the fact you are papertrading will probably skew the results.
If you can get this to work for you, who cares if other posters believe if it works or not? Good luck though.
I agree that managing the trade will help more (not always, but I think in r10 yes). However, I am going to keep the system simple for now. As said previously I am going to re evaluate at the end of the calendar year. I may introduce a scale out, a trailing stop, moving stop to breakeven, or a combination.
as vol said i don't think you can have a set profit target of 10 pts. you have to manage the trade based on market conditions at the present. for instance if were in a vicious downtrending down day you might only be able to make 3-4 pts off any long signal. i think the story is one must adapt any type of trading to there own personality and the the day to day market. for instance some people feel comfortable scaling in positions as things go against thema nd others don't. some people feel comfortable with 5 pt stops and others like 2 or 3. if if were that easy to buy here and sell there with no thinking all would do it
Quote from tortoise:
I couldn't disagree more. I think this has the potential to be one of the great journals, and I say that as one who thinks r10 is a sack of b.s. If I turn out to be wrong, I'll be the first to admit it.
So, I'll bite...
We're at a reaction low right now, correct?
Ok, then...
Long 1279....3 handle stop. 6 handle target.
I picked 6 handles 'cuz 2:1 reward:risk seems baseline healthy for this kind of approach.
Let the games begin
We were still in the first trade (and get stopped out right around this time). Hence no trade here for me.