the risk/reward and win %
- Thread starter traderkay
- Start date
Dear Mr. jack hershey,
Would you be so kind as to provide an example of what you mean here, using numbers? I'm trying to understand, but for some reason I am having a bit of difficulty.
Thank you,
FRuiTY P.
Lets look at the ES for Friday 14 FEB 03. The poster works to trade on the 5 min.
To make this more understandable you can look at the day in summary. There were four trades: 10, 15, 10, and 10. multiply by four if you work in ticks. 45 is a normal day. 3 to 5 trades is normal as well.
You need a reference for this before i go into it in detail so use a beginner trading set of signals. Use stochastic set for 14, 1, 3 and use the simple rule of just entering and exiting when there is a fast market pace only. Tape out the 20 to 80 center band (better still use 75 to 25 band to allow for more volatility in the fast pace. trade one is 10:30 to 11:00 long, trade 2 is 11:15 to 12:15 short, trade 3 is 12:30 to 13:20 long and last trade is 14:50 to close long.
See my next post for details on the answer I gave. I will give one statement for method and you can appliy it to the four trades as a way to reinforce your understanding.
To make this more understandable you can look at the day in summary. There were four trades: 10, 15, 10, and 10. multiply by four if you work in ticks. 45 is a normal day. 3 to 5 trades is normal as well.
You need a reference for this before i go into it in detail so use a beginner trading set of signals. Use stochastic set for 14, 1, 3 and use the simple rule of just entering and exiting when there is a fast market pace only. Tape out the 20 to 80 center band (better still use 75 to 25 band to allow for more volatility in the fast pace. trade one is 10:30 to 11:00 long, trade 2 is 11:15 to 12:15 short, trade 3 is 12:30 to 13:20 long and last trade is 14:50 to close long.
See my next post for details on the answer I gave. I will give one statement for method and you can appliy it to the four trades as a way to reinforce your understanding.
How to use the improvement I suggested.
Make a list of the formation extremes on a 1 min chart from open onward. The values are occurring every 2 to 4 minutes and are repeating periodically as well. This is lateral congestion and the paradigm will probably prevent an entry. By 10:35 plus an entry long will occur for any program that makes money. This causes the protection to kick in.
The simplest trailing stop method would be to use values from the right trend line and offset them 2 entries from the present for a beginner fast trend (intermediates could trade slower trend by staying 4 entries back when they used the signals for slower trend).
For what I suggested you keep a log of the left side of the trend in the same manner. At 11: 03 you get a left side signal that is less than the 10:51 left side signal and you go out at market at the beginning of 10:04.
The person actually trades on the 5 min so he is watching the 5 min bars but his paradigm is probably really fast enough to operate on the fastest data set available.
What you are getting here is a method that lags a little and you pick up exits on the first retrace of the peak (trough). You wonât make the whole run on each trend during the day trading.. So only take a % of whatâs possible.
We have 45 or so to back down from. Y getting a retrace it is sort of efficient as it is. Go for say 50% of whatâs possible as a goal using the paradigm as a starter. You can see 22 points a day is workable. Just doing it manually would yield more probably. This gives you a way to compare the software.
The thread starter is really not doing very well in his efforts it turns out. You can actually read that he has no protection effectively and that his exit (target) is his stop. All this is quite a handicap because he isnât trading trends at all it turns out and he is making predictions probably connected to his paradigm entry.
Compare the 22 points to the points of margin required for intraday for yourself with your broker. I think that a normal return daily can be 10 to 35% using beginner level methods. It is not possible for a person to trade anything but low risk trades (fast pace only) until he has tripled his initial money in a minimum of 25 days at the start. Then he can pick up slower trends and get into reversals etc.
Make a list of the formation extremes on a 1 min chart from open onward. The values are occurring every 2 to 4 minutes and are repeating periodically as well. This is lateral congestion and the paradigm will probably prevent an entry. By 10:35 plus an entry long will occur for any program that makes money. This causes the protection to kick in.
The simplest trailing stop method would be to use values from the right trend line and offset them 2 entries from the present for a beginner fast trend (intermediates could trade slower trend by staying 4 entries back when they used the signals for slower trend).
For what I suggested you keep a log of the left side of the trend in the same manner. At 11: 03 you get a left side signal that is less than the 10:51 left side signal and you go out at market at the beginning of 10:04.
The person actually trades on the 5 min so he is watching the 5 min bars but his paradigm is probably really fast enough to operate on the fastest data set available.
What you are getting here is a method that lags a little and you pick up exits on the first retrace of the peak (trough). You wonât make the whole run on each trend during the day trading.. So only take a % of whatâs possible.
We have 45 or so to back down from. Y getting a retrace it is sort of efficient as it is. Go for say 50% of whatâs possible as a goal using the paradigm as a starter. You can see 22 points a day is workable. Just doing it manually would yield more probably. This gives you a way to compare the software.
The thread starter is really not doing very well in his efforts it turns out. You can actually read that he has no protection effectively and that his exit (target) is his stop. All this is quite a handicap because he isnât trading trends at all it turns out and he is making predictions probably connected to his paradigm entry.
Compare the 22 points to the points of margin required for intraday for yourself with your broker. I think that a normal return daily can be 10 to 35% using beginner level methods. It is not possible for a person to trade anything but low risk trades (fast pace only) until he has tripled his initial money in a minimum of 25 days at the start. Then he can pick up slower trends and get into reversals etc.
Thank you for the comments, Jack. I tried my best to understand. This is what I gathered, correct me if I'm wrong:
1) Tinkering around with stop/target ratio is not likely to provide me with an edge. In fact you say, it won't.
2) You suggest that I do not use a pre-set profit target.
3) You suggest that I have an entry setup, the protection element (some form of a trailing stop), and a possible reversal re-entry criteria.
4) By "dynamic protection" you mean something like a trailing stop-loss.
5) You suggest I try to ride the trend. Well, you know I'm trying to trade ES here. ES has trend days 3-4 days out of a month. How can I ride a trend if there's none on most days?
Now the piece below I did not get at all.
1) Tinkering around with stop/target ratio is not likely to provide me with an edge. In fact you say, it won't.
2) You suggest that I do not use a pre-set profit target.
3) You suggest that I have an entry setup, the protection element (some form of a trailing stop), and a possible reversal re-entry criteria.
4) By "dynamic protection" you mean something like a trailing stop-loss.
5) You suggest I try to ride the trend. Well, you know I'm trying to trade ES here. ES has trend days 3-4 days out of a month. How can I ride a trend if there's none on most days?
Now the piece below I did not get at all.
Jack, thanks for actually trying to share a method (a bit rare on ET). I got a few questions:
1) What do you mean by "45 is a normal day"? 45 points possible?
2) What do you mean "tape out 20 to 80 center band"? 20 and 80 lines are not center bands...
3) What is "fast market pace"? And how is it defined?
4) I am not clear on the entries. What needs to happen to get us in?
5) The exits are described in the second post right? The trendline with displaced bars method, right?
6) Could you please post a chart with entries/exits/explanations?
See, that's why I said that you should write an e-book
You could title it: "22 points a day - here's how" There'd be much fewer questions
1) What do you mean by "45 is a normal day"? 45 points possible?
2) What do you mean "tape out 20 to 80 center band"? 20 and 80 lines are not center bands...
3) What is "fast market pace"? And how is it defined?
4) I am not clear on the entries. What needs to happen to get us in?
5) The exits are described in the second post right? The trendline with displaced bars method, right?
6) Could you please post a chart with entries/exits/explanations?
See, that's why I said that you should write an e-book
You could title it: "22 points a day - here's how" There'd be much fewer questionsQuote from traderkay:
Jack, thanks for actually trying to share a method (a bit rare on ET). I got a few questions:
1) What do you mean by "45 is a normal day"? 45 points possible?
** Sorry. i should be clearer. I look at the trends and evaluate them by taking values to the left of the decimal point. whole numbers. for each whole number there are 1/4's as everyone knows. the whole numbers are 50 bucks per unit and the quarters are 12.50. So 45 is 45x50 per contract or around 2000 dollars or so.
2) What do you mean "tape out 20 to 80 center band"? 20 and 80 lines are not center bands...
** On the stochastic which is a relative indicator and not an absolute indicator, you will see 100 divisions which are %'s for most people. Some people mane the three conventional regions and actually draw reference lines at two levels these levels are 20 and 80 for beginners and 25 and 75 for advanced users. there is a space between 20 and 80. this is the region a beginner should never look at. think duct tape. Tape this region out mentally so you cannot see what is going on there. I will use this blanked out region to define stuff for this response.
3) What is "fast market pace"? And how is it defined?
** the market moves at several paces and people trade differently from one pace to another. you can tell if a person is a beginner, intermediate or advanced by how they do these things for differing paces.
the stochastic as an indicator for different defaults easily tells you the pace. people who trade by being "pushed" by the herd use one kind of default; others who are not familiar with rapid capital appreciation generally use the defaults given to them by thier software. Set up with 14, 1, 3. and you can use "fast pace" to mean Always away from the center (50%, neutral) and continually above 75 for long and below 25 for short. this is elementary and until you are nailing down about three times initial capital every 25 weeks you do not trade any pace but a fast pace. Your paradigm is dissadvantaged at this time because it cannot trade any pace but an extremely slow one if you do ever get in to a trade. this is one of the worst dilemmas some paradigms create. Beginners need to make money all the time when they start out and fast paces are best because they end in congestion which affords a simple exit with little loss of capital by not being prompt in exiting. The dilemma of having a paradigm that can't recognize pace and, in fact, expects the beginner to do everything all the time is what dooms beginners to lose a lot of money. low trends are the most risky and they do not usually end in congestion but cause reveersals more often. the sluggish exit that is common for beginners (like going out on a stop, for example) is very very difficult on the emotions instead of building NLP pictures that are really badly needed. Picutres of a reverse nature get deeply imbedded.
4) I am not clear on the entries. What needs to happen to get us in?
** entries are simple and elegant for beginners. When the stochastic lines appear from behind the duct tape you enter. you will see often that only one line pops up. This is not an entry.
5) The exits are described in the second post right? The trendline with displaced bars method, right?
** That is alittle complex from what you say here. For a while were i you. I would exit when the stochastic lines dissappear. On friday you would have had a long, short, long long and accumulated about 2000 dollars per contract.
6) Could you please post a chart with entries/exits/explanations?
*** I might be able to if i learn how. If you can, print a 1 min and 5 min chart with the stochasic set at 14, 1, 3 and see how each does the same thing I said in the post where i gave the times of entry and exit for the four trades.
See, that's why I said that you should write an e-book
I'm sure. i do write books (about 30 so far) and i do have four under way now. Usually i write professionally and I am only an amateur investor.
[See, that's why I said that you should write an e-book You could title it: "22 points a day - here's how" There'd be much fewer questions [/B][/QUOTE]
A while back-- about two years ago i did a series of posts in MIF where a person could make 75,000 a year trading one trade a day on the DJXX during the first 30 minutes of the day.
I used MACD set to 5, 13, 6 for that with restraints on pace etc.
It was just a simple way to knock down 30 DJ points a day on the first trend of the day using one contract. Now the eminis are around and usually it is just as simple to use them to make the 300 dollars a day.
One thing for sure is important either way. Don't use a complete system to start out. Just use simple stuff and only trade trends that are going to end in congestion (fast trends only).
You could title it: "22 points a day - here's how" There'd be much fewer questions [/B][/QUOTE]A while back-- about two years ago i did a series of posts in MIF where a person could make 75,000 a year trading one trade a day on the DJXX during the first 30 minutes of the day.
I used MACD set to 5, 13, 6 for that with restraints on pace etc.
It was just a simple way to knock down 30 DJ points a day on the first trend of the day using one contract. Now the eminis are around and usually it is just as simple to use them to make the 300 dollars a day.
One thing for sure is important either way. Don't use a complete system to start out. Just use simple stuff and only trade trends that are going to end in congestion (fast trends only).
Jack, thank you for answering my questions. Posting a chart is very easy. First capture the image using one of the screen capturing programs like SnagIt (www.snagit.com) Then attach the picture file, using the "Browse" button located just above "Submit reply" button. Right now I'm posting the chart of 02/13 with the trades as I would take them per your entry/exit rules.