The Evolution of an E-mini Trader

stops and position sizing are necessary to prevent wipout on any given day regardless of what the market does. You have to do it, even if you can find a theory that says it hurts your profits. Well, it doesn't hurt your profits if it prevents total wipeout. Any system that allows for even the smallest chance of total wipeout on any given day will eventually lead to total wipeout. It is murphy's law and it is true. Look at LTCM, Victor Niederhoffer, etc,. there are thousands of examples.
 
Beltway,

You said larger stops are the better way to trade. How large is that in your case??

You also said you can't control losses with stops. Thats exactly what I use them for.

You have missed my point which is some people still have to work on their entry not just their exit. I never said you can lower your total losses by using a tight stop. Losses are part of the game but the smaller they are the more money you make.
 
Originally posted by Dizzyspell
Beltway,

You said larger stops are the better way to trade. How large is that in your case??

You also said you can't control losses with stops. Thats exactly what I use them for.

You have missed my point which is some people still have to work on their entry not just their exit. I never said you can lower your total losses by using a tight stop. Losses are part of the game but the smaller they are the more money you make.
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Hi Dizzy,

Would you mind giving one example of where it is possible to use a tighter stop? thanks
 
Maelstrom,

I have previously posted 2 charts on this thread with trades. All trades had 1pts stops. They are SP emini trades. Also today this example will please the people that advocate large stops. I have had 3 trades for a profit of 2.75pts, however if my stop was 2.25pts I could have made alot more.

But that is not the way I trade. Other times you lose alot more. I just missed the best scalp of the day by reading these posts. The short off the double top or if you are more conservative you could have sold the breakout at 981.25 after the double top for a scalp of a few points.

Back to the market and good trading.
 
Originally posted by Dizzyspell
Beltway,

You said larger stops are the better way to trade. How large is that in your case??

You also said you can't control losses with stops. Thats exactly what I use them for.

You have missed my point which is some people still have to work on their entry not just their exit. I never said you can lower your total losses by using a tight stop. Losses are part of the game but the smaller they are the more money you make.
More...

Dizzy,

We may be saying the same thing, just a little differently. I agree entries are crucial, and the tighter your stop, the more crucial they become. My point is that the loss per trade is not the only factor. If I set my stops too close, I can say I have tight loss control but I am really just increasing my percentage of losers dramatically, plus I am cutting off trades that might have gone to big winners. The tendency then is to take quick profits as well to get the win/loss percentage back in line, but then you are just churning all day.
 
All the comments are on the chart. I think it makes it easier, instead of hitting the back arrow all the time.

Looking back the chart is a little unorganized. I'll figure out something for tommorrow. Maybe # the paragraphs or something, so it flows easier.
 

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I really like this chart.

Looking at this, why did I get out of trade 3. Especially when I knew it was going to 970.

Going to figure out my MAE. Back later.
 

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AAAintheBeltway
I think you may be making a mistake in thinking the key to improving your results is to focus on your R's. By cutting all trades off at 1R, you will cut some bigger losers but you will also cut off a fair number of winners. In fact, the better your trade selection, the more winners you will be cutting. What I would advocate doing is to go back through all your trades and map the maximum adverse movement of all trades, ignoring your exits. Then you can come up with a distribution that will show you how big your "R" should be. You may find, for example, that once a trade goes 3 points against you, it is unlikely to come back. But you may also find that a high percentage of winners do go a couple of points against you. Maybe you find something different, who knows. But I think that is the way you should approach the problem. Otherwise, you are telling the market what to do, rahter than listening.
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OK, now you've done it and messed with my head. And...you got vulture and AllenZ rooting you on.

I went over June trades (roughly 90) and did the MAE on the winners, and losers. I believe I did it right, even if I didn't, the results are still staggering. Keep in mind, I try to keep my losses to 1 pt (1R) or less.

Of my winners, roughly 30 trades, the MAE is on average .75 of a point. Over half of them did not run against me at all.

Of the losers, roughly 60 trades, the average MAE was just under 3 pts (2.91). Here is where it gets interresting. Of those 60 trades, 31 ran against me 3 points or less!!!

Soooooo, theoretically, if I would have had a stop loss of 3 points, I would have had a winning percentage of 2:1, twice as many winners as losers, instead of the other way around. Give or take.

What makes this even harder to swallow, or easier, whatever the case...

I went back and eyeballed a 3 pt. stop on the trades for a few days. The wins made me sick. The first three I looked at, one had a 3 pt loss, instead of a 1.25 loss, but the next two would have been roughly 10 and 15 point gains respectfully. I thought this was a fluke, to I just arbitrarily pulled charts from the stack, and it was the same. Some bigger losses, but many HUGE gains.

Now, as I say to my daughter, you have new information to which you are responsible for. What you choose to do with that information is up to you.

My head hurts.:)
 
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