The Wisdom in Expectations

ElectricSavant

ElectricSavant

When you find your edge (the way you feel comfortable to profitably trade) :

Expect a low Winrate 30-40% is great! and if you can eek out a 3:1 Avg Win : Avg. Loss Ratio you are golden...2:1 is great also with a Winrate >40%! Learn how to appreciate Avg. Win/Avg. Loss more than Winrate. Actually High Winrates alert me to something that is wrong. Trading is not about winning but about profit.

Trade with Micro Futures (MNQ is best) if you have under 10K and use the scaling that becomes available to you because you are trading correctly with the correct capital and the correct instrument. Consider ATR of the instrument, leverage and exposure verses capital required. Some traders use a formula of 1 micro per 40K!

If you are always "in" the market use a "maximum daily loss" set with your broker in the platform global settings for safety especially if you do not use hard stops in your "Stop & Reverse" system. Keep it loose enough... as the purpose is to protect you from catastrophic loss.

If you are not automated do not get so greedy that you trade until you are falling asleep at the mouse. The market will be there tomorrow. Don't make mistakes! When sleeping at the mouse your finger can click!

Make friends with a coder and understand what you are trading and how your system works.

Pencil out your number of trades and commission rates. Seek out good execution and savings. Do not marry your broker as this is a business. If you are spreadsheeting trades use a full MNQ point for slippage and figure in commissions. If you are a frequent trader cost & execution become more important.

ES
 
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monet,

Yeah I edited it... to read >40% for the 2:1. Thanks. I was using round numbers with ranges. There are more exact calculations...agreed.

When I get near the threasholds I look for a new system. My spreadsheet alerts me.

I am getting ready to go live with one of my systems that I am forward testing. I am debating if I should start a journal here or not. I do not want to ruin my ET experience but I need validation.

Es

monet said:
2:1 RR with a 30-40% win rate is pretty much breakeven.
More...
 
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re: Wisdom in Expectations
The only expectations I am familiar with are the classic book Great Expectations by Charles Dickens and the false expectations from Newbies on ET,:wtf:
 
ElectricSavant said:
I am debating if I should start a journal here or not. I do not want to ruin my ET experience but I need validation.

Es
More...

I think journals are ok for someone starting out and need much advise, but for those with more than few years, think it is a curse of extra stress and this forums attacking nature of dragging up past experiences/posts. Perhaps better to send trades to ET member to validate and be much less stress. imo
 
Folks.

I am sharing some wisdom that I have learned for myself. You may or may not have the same experience and I could be mislead with my input.

I am noticing some re-occurring themes as I manually plot-out trades in my never-ending spreadsheets. Currently working on a 48.84% winrate with a 3.25:1 Avg win/loss. I enjoy working with numbers far more than the risky experience of trading. I force myself to trade to validate my work and find myself not trading 100% of the trades in my system rather short consecutive segments of it. I stop and take a break at a high water mark.

Concerning trend strength and trend-following when "always in" a string of wash trades is usually followed soon by a nice move. Scaling actually works nicely and doubles yield. Putting this together with volume readings...well that would be nice and could tell me the best time to trade.

I need to find a period of time to stress test this puppy. I have a catalog of slices...time to pull up my research.

Who needs backtesting? Trading in a Can.

ES
 
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Using money management based on your trades and your system logic rather than some sort of canned Kelly something or other yields far more with less drawdown. Learn to rank your trade set-up's.

Why are you increasing your number of contracts? Has the market been chopping?...when will it let loose a pullback or a micro run? What are the weighted stocks that make up your index doing? Examine your strings of losses/wins and what time they occured. See if your wash trades are occurring at a certain time slice.

Es
 
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In building spreadsheets these are some observations about wash trades on trend systems:
  • Wash trades = market indecisiveness
  • Wash-trades = fishing with a trade
  • Wash trades = sideways (micro profits...try to handicap with high slippage)
  • Wash trades = can occur more often during low volume or night trading. caution: slippage can be higher.
 
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Indicators can be used in charting and system tracking. They are useful in their summary but lag.

ES

50% at 3.8 under stress (string = 8 contracts DD = $115.48 with 7K)
 
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