The Trouble With Scribbles

Here's one of the issues for daytraders and swing traders----The sell signal came well before the opening bell RTH today when most were asleep.
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One further clarification should the question arise----What about the 2 buy signals that are here on the 5 min chart. The answer is that they are counter to 15 and the 60 and so are likely to be just bounces and nothing more. Can you trade them? You can, but you would just try to grab a few points only. I don't consider them worthy just as I marked the early morning sell signal as not valid. (At the time it was countertrend as well).
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Here is an example of one of the scribble students putting the SLA scribble method to use. The student has drawn lines, but as one can see, the lines play very little importance in the trading. The big move of the day occurs well outside the so called range and causes the trader to find pause and miss the entry, until such time as he realizes that he needs to look at a different time frame as well and see if there is further information for confirm and/or entry. Where he describes chop is actually the beginning and completion of basing. The SLA does not provide real time analysis so that the trader can trade things that don't correspond to the range. The SLA scribble method shows itself to not be dynamic in nature--Rather it is very
static and not useful in the least. In addition--no comments are made about trade/risk management.
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Here is a recent posting by a very new scribble student. In this posting, you will see that the trader is focused heavily on a high win rate as they are using an "emergency" stop and a profit target which are one and the same amount. This is not the way to trade and I believe that the student is being taught this by the educators. This shows that the SLA is a negative sum game as commissions are not counted here. In addition, the high win rate of 67% here is based upon paper trading and fails to take into account slippage and the cost of doing business. --You must have your winners far outstrip your losers in order to be a highly successful trader. The SLA is being presented as an "end all" but in fact is designed to rob the unsuspecting trader of the extended gains that are required to be a real winner. Also, the win rate is unrealistic given that there was no money on the line in the analysis. The only way to truly analyze and create your trading MO is to lose real money in the real market, thus the SLA observation segment is a waste of time. Once again, the SLA is unremarkable at best.

------------------------"I've been demo trading this setup as well for the last week or so and the results thus far are pretty much in line with these below.

Trades 100
Winners 67
Losers 33

Profit Factor 3.36

MAX Consec. Win 7
MAX Consec. Loss 3
MAX Drawdown ($) (360)
MAX Run UP ($) 1200
MAX Win ($) 200
MAX Loss ($) (200)
AVG. Win 155.56
AVG. Loss (78.92)

hold time (ht) 0:03:57
ht winners 0:04:59
ht losers 0:02:20

Parameters:

Entry type Reversals

2 Contracts

Emergency Stop 5pts
Take Profit 5pts

Discretionary Take Profit based on price behaviour - for example - if it became clear the trade wasn’t going to go to target. Thus the average win is below 200.

Discretionary exits at Wyckoff Danger Points or as mentioned above, based on price behaviour. 2 trades were max stops.

Entries taken at levels identified in Pre Market, and specific intraday market structure levels (i.e Intraday High /Low etc). I’d identified these levels as providing good trading opportunities during my 100 Range exercise."------------------------
 
His emergency stop was only hit twice. Twice out of one hundred. You seem to only see what you want to see. His average stop is less than 2pts. Call it 2pts. if you want to factor in slippage. Still a good outcome. I'll bet this kid becomes successful. He's done a good backtest. It should be enough for him to trust his method and trade with discipline. IMHO that's what it takes.
 
Let's hope he is successful. However, it is highly unlikely given that he is not considering the real time aspects of trading and is curve fitting his backtesting. In order to be successful, you need to lose real money in the real market. The educators of the Scribble Method do not instruct the students in any manner on how to let profits run and cut losers short. Neither do they discuss slippage and emotions and commissions etc. Everyone needs to look closer at what is being proposed.
 
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