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Trading Winning Positions - The optimal approach
- Thread starter mschey
- Start date
I think the point is that you don't presume to know when the trend will end. That's the whole point of following the system in a mechanical manner. Some you might get stopped out on the first unit, some you might get up to 5 contracts and otherwise rarely maybe 20 contracts. We don't know what the market is going to look like this time so just follow it as far as it goes. Obviously longer uninterrupted runs are rarer than shorter ones but how can you know when copper or OJ or cocoa or 10 yr notes is going to have a 10% or 20% move with limited pull backs? You don't. But that's a big payday to miss out on because you 'thought'. Mechanical systems like this are a way to ensure consistency and answer questions such as when do I take profits off the table? Or an alternative criteria of answering: is the momentum in this move done?
You sound like a discretionary trader so if you put a trade on, how do you decide when to take off a trade? And has this been successful?
If so then great, if not then try another criteria. Tomorton is just suggesting another lens through which to view the same thing (when to buy and when to sell).
You sound like a discretionary trader so if you put a trade on, how do you decide when to take off a trade? And has this been successful?
If so then great, if not then try another criteria. Tomorton is just suggesting another lens through which to view the same thing (when to buy and when to sell).
What number of buys do you do before you say right, I think it's done going up?
There's no limit. So if the trend continues without serious pull-backs sufficient to trigger the universal stop, you keep adding to it. The important thing to bear in mind that I only regard risk as risk to account capital: as this can never increase above 1.0 and as after 3 parallel trades it has fallen to zero, I have no reason not to add another and another position: and as the trend continues strongly, that gives the opportunity.
As far as I have ever heard, my pyramid tactic is the only one which has even a possibility of reaching r:r in double digits, which I believe it achieves after 7 parallel trades.
There's no limit. So if the trend continues without serious pull-backs sufficient to trigger the universal stop, you keep adding to it. The important thing to bear in mind that I only regard risk as risk to account capital: as this can never increase above 1.0 and as after 3 parallel trades it has fallen to zero, I have no reason not to add another and another position: and as the trend continues strongly, that gives the opportunity.
As far as I have ever heard, my pyramid tactic is the only one which has even a possibility of reaching r:r in double digits, which I believe it achieves after 7 parallel trades.
Can i ask tomorton what sort of time frame you typically trade? Are you trading based on daily data by which I mean the open high low and close for one day comprises one entry on the chart rather than intraday time frames ?
Also have you found that using some sort of weighted volatility measure skewed towards recent data is better than anequally weighted volatility measure? For example you set the stops for a long position at the entry price minus the the average true range for the last 20 days (or some other multiple of recent range).
Can i ask tomorton what sort of time frame you typically trade? Are you trading based on daily data by which I mean the open high low and close for one day comprises one entry on the chart rather than intraday time frames ?
Also have you found that using some sort of weighted volatility measure skewed towards recent data is better than anequally weighted volatility measure? For example you set the stops for a long position at the entry price minus the the average true range for the last 20 days (or some other multiple of recent range).
I trade off the dailies only. I take account of weekly bars only in comparing strengths of trends on different charts.
It could be. If I can't find a TA-based SL level, say the bottom of a swing low for a long, I would use 2 x ATR14 to set the initial SL. But if this works out at say 83pts, then I retain the 83pts as the "grid" right through this series of trades on this market.
Only thing I would add is some "escape plans". If you're long, exit manually if price closes below the 50EMA or if the 20EMA closes below the 50. If you're long equities, exit manually if the Dow prints either of these.
As I've posted previously, these rules would have got you into cash before 16 of the 20 worst 1-day falls in the Dow since 1900.
As I've posted previously, these rules would have got you into cash before 16 of the 20 worst 1-day falls in the Dow since 1900.
Here. Price is 50. You add 1. Now it goes to 51. You add 1. Now it goes to 52. You add 1. Now it goes to 51. Last position closed. Now it goes back to 52. Do you add another one? Now it goes back to 51. You have a number of losses. Now it goes to 52. Do you add another one? Now it goes to 53.There's no limit. So if the trend continues without serious pull-backs sufficient to trigger the universal stop, you keep adding to it. The important thing to bear in mind that I only regard risk as risk to account capital: as this can never increase above 1.0 and as after 3 parallel trades it has fallen to zero, I have no reason not to add another and another position: and as the trend continues strongly, that gives the opportunity.
As far as I have ever heard, my pyramid tactic is the only one which has even a possibility of reaching r:r in double digits, which I believe it achieves after 7 parallel trades.
To what extent do you let it go back and forth in the middle?
Considering MA crossovers do not have forecasting uses, why would you exist a long position when a 20 crosses a 50?Only thing I would add is some "escape plans". If you're long, exit manually if price closes below the 50EMA or if the 20EMA closes below the 50. If you're long equities, exit manually if the Dow prints either of these.
As I've posted previously, these rules would have got you into cash before 16 of the 20 worst 1-day falls in the Dow since 1900.
Here. Price is 50. You add 1. Now it goes to 51. You add 1. Now it goes to 52. You add 1. Now it goes to 51. Last position closed. Now it goes back to 52. Do you add another one? Now it goes back to 51. You have a number of losses. Now it goes to 52. Do you add another one? Now it goes to 53.
To what extent do you let it go back and forth in the middle?
No. A new position is added at each grid increment, i.e. 1. All stops on all positions are set at the penultimate grid price. So if price goes to 52, all stops on this latest trade plus all already open trades are set at 51. When price hits 51, all trades close simultaneously.
The chart now goes back on the watch-list in case the TA would support a new trend-following buy and the start of a new series of pyramids.
Considering MA crossovers do not have forecasting uses, why would you exist a long position when a 20 crosses a 50?
I would consider a trend-following long if as many as possible of my TA criteria are met, but definitely the three mandatory criteria -
1) the 20EMA is above the 50
2 the 50EMA is sloping upwards
3) the 50EMA is above the 200
If already long and one of these three criteria is eliminated by price action, it doesn't make a lot of sense for me to continue holding and adding. I could live with a little negative slope by the 50, but when the 20 crosses below, that would just get me out every time. Though it would be rare for the 20 to cross below the 50 without the universal stop having been already triggered.