SPM discussions

Quote from sandygray66:

Paul - You don't have to be ashamed about using a stop larger than your target....mathematical expectation (% win x $ win - % loss x $ loss) can still be quite postive with a risk/reward ration > 1, depending upon the probabilities (certainly a 99% win rate would do it :) ).

So what size stop do you use with your 7 tick target?

Sandy
More...

Sandy,

Hey man seems like you are going well which is good. Just struck me though that you have been to a lot of the education stuff ie Felton and have spent plenty of cash yet you come back to this system how do you reconcile that? What I am trying to say (probably not very well) have you used your other learnings to modify what you do with this thing?

Cheers
 
FWIW I am using SPM now to time the stock trading I was doing anyway. I have a whole other tool with SPM to try to get into these trades at the best possible moment to have a futs move put me into green. And as the OP knows, good tools are hard to find, so sez Mr. Sausage (hey try that for a new nick).
 
<i>"Paul - You don't have to be ashamed about using a stop larger than your target....mathematical expectation (% win x $ win - % loss x $ loss) can still be quite postive with a risk/reward ration > 1, depending upon the probabilities (certainly a 99% win rate would do it )."</i>

fwiw: I have never seen any emini trader, not one example who has ever survived over the long haul using inverted risk/reward ratio.

For awhile, even some period of time a trader can string together solid performance using that mm approach. However, it is 100% certain that market conditions will change, tapes will behave differently etc. By the time said trader adjusts to that change, the % larger losses have whacked his account hard.

Then begins the mental = emotional breakdown of discipline, which leads to ruin.

Smaller win, smaller win, smaller win... larger loss. That eventually leads to smaller win - larger loss - larger loss - larger loss streak. It's 100% certain probability of happening, given enough time.

Please do not mistake temporary "feel good" with long-term stability robustness. There are many differences between the two.
 
On the topic of stop placement, I have to say that regularly during periods of time ES has a whole lot of back and forth. If you can enter and exit during those times, you can take advantage of that. I don't think it makes sense to exit at the worst point of a volatility expansion against you, IF THAT CAN BE AVOIDED. That being said, I find this idea much easier to execute on stocks that are perhaps lagging the futs.

One way to do this is to enter a trade and say "I expect XYZ to happen in x period of time". If this is not happening then you look for an exit, while keeping a worst case stop so that if you freeze like a deer in the headlights on some big move against you, you still get out. I am only posting this because I am finally doing this somewhat after observing this possibility for a while. There are a lot of "air gap" retracements on the time and sales level where you can really improve on prices coming and going. Often these air gaps come after some noticeable panic moment, especially ones own panic lol.
 
Quote from austinp:

<i>"Paul - You don't have to be ashamed about using a stop larger than your target....mathematical expectation (% win x $ win - % loss x $ loss) can still be quite postive with a risk/reward ration > 1, depending upon the probabilities (certainly a 99% win rate would do it )."</i>

fwiw: I have never seen any emini trader, not one example who has ever survived over the long haul using inverted risk/reward ratio.

For awhile, even some period of time a trader can string together solid performance using that mm approach. However, it is 100% certain that market conditions will change, tapes will behave differently etc. By the time said trader adjusts to that change, the % larger losses have whacked his account hard.

Then begins the mental = emotional breakdown of discipline, which leads to ruin.

Smaller win, smaller win, smaller win... larger loss. That eventually leads to smaller win - larger loss - larger loss - larger loss streak. It's 100% certain probability of happening, given enough time.

Please do not mistake temporary "feel good" with long-term stability robustness. There are many differences between the two.
More...

You could be right and probably are right. I am not saying what I am doing is the best way in a normal market. I am just saying I think it's VERY hard at least for me because

1. I don't have enough experience.

2. Huge swings in the market right now and I am not staying in long enough to ride them out.

I have tried decreasing my stops and tend to get stopped out more than not.

What I am doing seems to work at least for the time being. When it quits working even for a couple of days I will stop trading rethink what I am doing.

To answer Gray's question I am using 11 tick stop and 7 tick profit. I could probably use a 8 tick profit w/no problem but I have settled w/11 and 7 for now.
 
As an add on to my last post. I have also only been trading the first and last two hours of the trading day. Not sure if this matters but to me it seems like there is less sideways movement and small crosses that switch back.
 
Quote from Bogan7:

Sandy,

Hey man seems like you are going well which is good. Just struck me though that you have been to a lot of the education stuff ie Felton and have spent plenty of cash yet you come back to this system how do you reconcile that? What I am trying to say (probably not very well) have you used your other learnings to modify what you do with this thing?

Cheers
More...

Hey Matt -

I use bits and pieces of everything I've learned through the years. Each of us has to forge his own path. I chose early on to invest in a several different methods/teachers. Do I regret that? No, not in most cases. I took a lot of courses in college, most of which had no direct relevance to my career later in life, but they were all part of building my base of knowledge.

I find SPM to be a terrific framework in which to implement other methods I've learned. Case in point, I worked with divergence trading in a couple of the courses I took. I take divergence trades with SPM (even though it's not part of T28's prescribed entries), and they work quite nicely (5 winning divergences today, after the two I mentioned yesterday). I also use an entry technique which I learned from one of the courses.

Bottom line is that trading is about adaption of methods/knowledge and making them your own.

Sandy
 
Quote from pclark:

As an add on to my last post. I have also only been trading the first and last two hours of the trading day. Not sure if this matters but to me it seems like there is less sideways movement and small crosses that switch back.
More...

With the extreme vol especially in the afternoon I am surprised you can stay in the game with an 11 tick stop level as the market moves 2-6 full points a bar on my 233 tick chart? How do you stop being stopped out with such tight parameters?
 
Quote from Bogan7:

With the extreme vol especially in the afternoon I am surprised you can stay in the game with an 11 tick stop level as the market moves 2-6 full points a bar on my 233 tick chart? How do you stop being stopped out with such tight parameters?
More...

Its funny you say that because I did get stopped out this afternoon :) I had taken 3 trades this morning though and so I am still up for the day over $400 dollars. It doesn't always work and I will even move my stop if I feel the trade is still going to go in my direction.
 
Quote from pclark:

Its funny you say that because I did get stopped out this afternoon :) I had taken 3 trades this morning though and so I am still up for the day over $400 dollars. It doesn't always work and I will even move my stop if I feel the trade is still going to go in my direction.
More...

Mate not surprised the moves were very sharp both ways
 
You must log in or register to reply here.
Back
Top