The reason I dont use any indicators

[777]

Retail traders do not have those two items at their disposal, so the point is moot.

It has been my experience that it is usually best to get as close to the truth of a subject as possible in important areas.

Even with retail momentum, it is good to understand "let your profits run" a situational idea as compared to "manage your risk with prudent position sizing". There are times when exiting a trend, or partially exiting, before you "think" it has topped is correct, while not overbetting/imprudent position sizing is a clear goal on each trade.

(Also, not everyone here is retail)

Though, I understand your point. Thanks for your perspective.

 

[777]

Are you smoking something? How on earth do you get a +expectancy without proper management? How do you think you get the edge in the first place?Discipline and management first and profits will follow.

Positive expe

Rubbish. You can't manage your way to "edge". It doesn't matter what your management strategy is, if there is no edge to begin with, then this is NO edge. Period.

Some do manage risk in a naturally conservative way without defining in their mind the difference between their expectation on a bet and their bet/position size. It is possible, but...

With many pros: edge, variance and risk management are often thought of separately and weaved together. I suspect that ultimately, for many, this is a better way to view this.

Also, positive expectation is a statistical term with a precise meaning. Some try to stay within standard meanings of terms.

Simple Example:

If I had a coin that came up heads 60 percent of the time, how much should I bet?

Math guys would look at their edge and the variance before deciding how much to bet.

Two real life examples:

1. I knew I had an edge on the Mayweather fight, so how much should I bet was an important thought.

Well.. some people would consider my estimated winning chances and the payout to be helpful information.

BUT, yes, I have known naturally conservative old time gamblers and traders who made it.. but it seemed harder for them to adapt and perhaps they could have done even better (?)

2. Long Term Capital truly had positive expectation on most of their bets and they had overall positive expectation, but they managed to overbet their roll, which amazed many as they collectively had IQ's above MENSA and a lot of trading experience.
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Notes and thoughts:

1. Quant firms break things down. Firms such as Sesqhanna teach their traders to break things down into edge and variance.

But risk is taken in a more conservative way than the formulas dictate, for obvious reasons.

2. I never personally met a professional trader or gambler who said they could make a living on trades/bets where they has a disadvantage on their bets, not that this is what you are doing.

If a coin was biased 60 percent for heads, they would not feel they could make a living betting on tails.

If the coin was 50/50 they would not think they could make a living in the long run.

3. Folksy saying not to take too literally:

There are old gamblers/traders and there are bold gamblers/traders but there are no successful old and bold gamblers/traders.

 

[BONECRUSHER]

You're wrong on that. Utilization of correct risk management is all that the retail trader has. It is all there is.

Then how can you say "indicators have tremendous predictive capabilities" that are available for traders to use, but at the same time you say "utilization of correct risk management is all that the retail trader has"? Do you use these "predictive indicators" in your prudent risk management and if so, doesn't that imply some sort of ENTRY PREDICTION? You're contradicting yourself, no?

 

[777]

Many of the arguments about "positive expectation" in trading are simply an unrealized disagreement over what the term means to them.

1. Positive Expectation has a precise statistical meaning and I prefer not to roll my own, here.

Of course the people saying you must have an edge on your bets to succeed long-term are correct.

And, you can go broke trading with an edge/positive expectation.


2. Some posters are viewing the term as in "What figures to happen" if you consistently trade positions that are far too large? How can that end up in a "positive" fashion.

Of course they are also correct.
_____

The few posters who feel they could do well with no edge on their bets, like betting at even money on 50/50 coin flips, are mistaken.

 

[Buy1Sell2]

Simple Example:

If I had a coin that came up heads 60 percent of the time, how much should I bet?

No more than 2% of Total Liquid Net Worth (TLNW)

 

[Buy1Sell2]

1. I knew I had an edge on the Mayweather fight, so how much should I bet was an important thought.

No more than 2% of TLNW

 

[Handle123]

I can have respect for people without having respect for their opinion, I also didn't say i don't respect every ones opinion , ( just some, I seem to have become embroiled in what I consider to me a slightly ridiculous point of view, in particular DTB2, I don't dislike him , but his point of view is a million miles from mine , and I disagree with a lack of emphasis on entry point as well( I know I'm making lots of friends right now),but I know some will agree with me , experience makes me wait longer and longer for exactly that , good entry , a place where you get to decide maybe a dozen variables and or extreme behavior etc which you will never find on exit because you don't have the time to wait the 10 000 bars or whatever it was that gave you great entry.

For the longest time, thought entry point was best way to control risk and help with edge. Seven years ago I did back testing that proved to me that it does not matter where I get in as no price action or indicator can foretell the future. So the only partial way I can "control" the trade was risk though management which can be price action to the left of now to stop me from taking trades and hedging, which most of retail don't do.

 

[learner2007]

and it isn't my first language:

You could fool the whole world!!
I hope you're not neglecting to use your first language. I've found that using your native language so little for so long results in the loss of your idiom. Quite embarrassing when having to speak or write.

Thank you for providing an explanation of your thoughts regarding the importance of entries. I'd like to comment later when free.

 

[Grantx]

For the longest time, thought entry point was best way to control risk and help with edge. Seven years ago I did back testing that proved to me that it does not matter where I get in as no price action or indicator can foretell the future. So the only partial way I can "control" the trade was risk though management which can be price action to the left of now to stop me from taking trades and hedging, which most of retail don't do.

Thats what I dont understand about scalping. Lets take CL as an example. Scalpers will aim for 6-10 ticks with a 5 tick stop! Entry has to be precision...either resting orders that get smashed through or otherwise the scalper has to be absolutely spot on with entries, and that is veeeeery difficult to do especially with something that has an ATR of 13 over the last 15 bars (Dont quote me I just pulled that out of the air). You with me? At any single price point there is 'noise' and if that noise is 13 ticks, how in the heck does one expect to scalp the market with a hard stop anything less than that? I just dont know. I tried, and got smashed. But there are traders that do it and hats off to them.

 

[Buy1Sell2]

Thats what I dont understand about scalping. Lets take CL as an example. Scalpers will aim for 6-10 ticks with a 5 tick stop!

This is not scalping. Scalping is the taking of minimum ticks ---typically by market makers. --Retail traders do not have scalping available to them as a viable avenue to success. --What you are describing is short term day trading. In your example, the reward to risk ratio is much too low at the 6 points and a little better at the 10 ticks.