Tight Stops

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Quote from Lefty62151:

What part of my post are you not reading. You have charts. Look at the trend days. As I have said previously, I prepare for trend days. I enter near the open and hold as close to the close as possible. My expenses are often less than $10.00 US for the day and I consistently capture the majority of the range. Unless your broker offers you free service, I am ahead on expenses. I capture most of the daily range. Unless I am mistaken, you are entering multiple times so you cannot be capturing as much of the daily range. Where exactly would I be able to improve my trading?
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How you could improve your trading? Based on this post, some hints:

1) Stop always trying to hit the "home run". This is a common newbie mistake. Not only will always going for the home run make you miss out on many good trades, but also there aren't a lot of real trend days in a month. Only maybe 2-3 days a month on average? And you bet I'm riding them hard when they're there. The rest of the time, I trade the range. You make most of the daily range, yeah but exactly how many days a month?

2) You need to realize that "trends" aren't the only way to make money. In fact, I make most of my cash during trading ranges. Why? Because that's where the R:R is. Fade the tops and bottoms of the range, and you can use tiny stops and (relatively) large targets. Do this with high frequency (which congestion / range offers you on a silver platter) and you can be taking more even than on a trend day. Guess what, that's what I do, and that's what the floor traders do. However, the so-called "fat tail traders" (one of which you clearly are) will never understand this concept.

3) If commissions bother you so much, you a) either don't have good enough edges or b) your commissions are too high, i.e. you need better clearing firm / exchange seat.

Hope this helps. :p
S
 
Quote from Scientist:

How unfortunate that you didn't even bother reading the thread any further. If you had, you would have noticed my explanation.

My first mentor shared outlooks, methods, attitudes, experience, setting the rules, making a plan, setting up a trading biz etc.
My second mentor shared solid, quantified, unambiguous edges, which I gladly paid for and added to my repertoire.

Is thatUnbelievable!
S
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I did read about the new surprise second mentor- who in your prior 2000 posts we had never heard about.

This is from another thread:
Quote from Scientist:

From what I feel, a mentor needn't be charging you anything... A trader who's good enough to qualify for your mentorship should be making enough money to make any "disbursement" from your side seem rather ridiculous.
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http://www.elitetrader.com/vb/showthread.php?s=&postid=385291&highlight=mentor#post385291

To all, I think wavetrader has some useful things to say, so sorry to be getting off the main thread topic here.
 
<i>Of course he's right. I've got the quantitative evidence to prove it. I just won't divulge it here, for obvious reasons. </i>


I’ll divulge it for you:

It doesn’t matter how many losses you have as long as you have an edge. Your system only needs to have a tiny edge. Giving up profit to smooth out your equity curve may be beneficial if you maintain your edge and smooth out your equity curve. Your profits come from compounding your edge. Keep your equity curve smooth and you can increase your bet size.
 
Quote from WaveTrader2004:

I can go long and scalp a short or go short and scalp a long.

You have a method that is inefficient.

BBG
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Agree on that being inefficient. That's what I do, too. I often have positions with the larger direction, exit partials / countertrade with larger size in the smaller fractal at the leading end of the envelope, then exit and add again at the trailing end in the larger fractal. Basically, maximizing returns by encapsulating several fractals in order to capture the maximum of movement with the minimum of drawdown.

How scary. I think we're going to have a lot of fun, WaveTrader... :p
 
I come in and start a new thread and in one day we are up to page 11.

But it goes to show you all of you are really not sure what you are doing.

If you were sure you would have a solid foundation on this business.

I don't think more than 5% of this thread have any idea about trading to WIN.

You are idiots camped on a river bank.

But you attacked me so now I am telling you the truth - you have no idea and I don't need to teach you.

Maybe a few of my guys who haven't been posting to this thread but are members will see my point and learn.

Never throw figs to pigs.

BBG
 
My goodness:
Thats what I do. I am in the market on trend days. Please do re-read the post. You only need a few trend days to make great money. Especially if you know how to manage size. As for trading range days, you are right, the ES has had mostly trading range for quite a while. As I have said before, you have charts. Within the range there have been a number of trend days. Although the pace changes seasonally, the ES trends about 23% of the time. Horses for courses I guess, but I can assure you that a good trader can make money "waiting" for one to come by. In addition, I am exposed to a lot less risk this way. I always try to remind myself, that I must never be too proud to learn something new. I understand about trading in a range, but have had better results this way. Good luck in the markets. Lefty
 
Well if you had a brain it would be lonely!

And if brains were dynamite you wouldn't have enough to blow your head off your shoulders.

You see this is how I can get banned and I don't care because I don't need you guys.

I just tried to help you but some of you are so F... stupid no one would help you.

Anyway I am out of here let Scientist tell you the results.

BBG
 
And all this time I thought we were having an interesting conversation :D I was just explaining to Scientist that I understand the concept of range trading. Thinking about it, I remember that I had success some years ago using a combination of ADXR and and MACD. The MACD was based on the High of the bar however. This change (from the close to high of the bar) caused the display to slightly exaggerate the highs and lows this getting me in slightly ahead of the pack. Would probably work well today in the ES. Anyway, I really am sorry you feel that we are treating you badly. It was not my objective. I do reserve the right to a healthy skepticism and I hope to display it with a minimum of (friendly) insults. Good luck in the markets, Lefty.
 
Quote from swheat:

<i>Of course he's right. I've got the quantitative evidence to prove it. I just won't divulge it here, for obvious reasons. </i>

I’ll divulge it for you:

It doesn’t matter how many losses you have as long as you have an edge. Your system only needs to have a tiny edge. Giving up profit to smooth out your equity curve may be beneficial if you maintain your edge and smooth out your equity curve. Your profits come from compounding your edge. Keep your equity curve smooth and you can increase your bet size.
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Ouch! You shouldn't have done that... You spoiled all the fun. :(

But since the damage is now done, may I add something. The higher frequency (resulting from smaller targets and smaller stops) also isn't a bad thing, but actually a good thing. The higher the frequency, the faster your edge plays out (if you have one), plus the smoother your equity curve will be as a relative distribution over time. This is why the dealers at casino's are instructed to play fast. Because their edge is small, but their frequency is high, so it more than pays for the casino. They do hundreds of "trades" per day. Any big casino, despite its tiny edges, will be profitable almost every day. I have a few systems on ES and BUND that use as little as 4T stops, with frequencies ranging from 30-60 trades per day, all of which rarely even have losing days. If they only traded 3 times a day, losing days would obviously be very common, as a succession of 3 losing trades is no rarity. However, high frequency pushes the distribution in my favor on a daily basis.

The payoff? Very smooth distribution, much smoother equity curve, lower relative risk and thus drawdown, plus higher equity allocation per trade (smaller stops = lower relative risk = larger size)

It's actually as simple as that. If you re-read what I said above, it doesn't take a PhD to figure out. However, some people (i.e. Lefty) are so stuck in their belief systems, they wouldn't see the truth if it poked them in the eye.

Ask any decent systems trader what are the ideal characteristics of a good system. He'll tell you it's:

- Low drawdown
- High R:R
- High Hit Rate
- High Frequency

If any of these are poor, then you have a problem. Even if your R:R is incredible, your hit rate 95% and your drawdown as a result almost non-existent - it doesn't actually impress anybody or make you a living if the signal only comes once a year.

If, on the other hand, you have a positive edge, and high frequency, then you can have a poor R:R and a poor Hit Rate, and still make very decent money!

There's a lot of "secrets" in this post which should help a lot of the "doubters" on this thread get out of their shells and have a look at reality. This is actually how it is. You are welcome to do your own maths on it, and you will see I'm right.

Enjoy! :)
S
 
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