Well, if you know which uptrends reaching 50 will continue to 56 before they suffer their first 1pt pull-back, I wish you good fortune. I am sure we have nothing more to discuss as I am simply not able to trade on your level.
Trading Winning Positions - The optimal approach
- Thread starter mschey
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Well, if you know which uptrends reaching 50 will continue to 56 before they suffer their first 1pt pull-back, I wish you good fortune. I am sure we have nothing more to discuss as I am simply not able to trade on your level.
@tomorton I have used the exact same idea years ago and then discarded it
as you can see on paper it looks very good ...but you have to capture 2 grids before becoming profitable..
As the entry condition does not matter the system depends on continuous price trend without retracement by 1g.
the problem is price action very frequently moves/retraces by 1g regardless of what you choose as g.
After a sample number of trades
what I observe is roughly 45% trades are -1g and 25% trades are 0g
so 70% trades end up losers
And 10% trades are 1g which returns 0
rest 20% trades will capture 2g to 7g ...anything beyond is very rare.
and with each additional g the % number of trades will reduce...
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Nice post, thank you.
Yes I know that though the loss of -1g can never be exceeded, it persists across 2 trades, so twice the holding time so twice the possibility of being stopped out.
What I'm interested in is trading off the certainty of never having a greater loss per trade against the possibility of having parabolically greater wins per series of trades for no additional capital risk.
We shall see how this works out of course. Its possible that your results are less advantageous than mine will be, we will see.
But surely you must have realised that if only 5% of your trading examples made +3g, while all the remaining 15% of winners made only +2g, and no trades at all did as well as +4g, even your figures indicate break-even? So I think this approach bears exploring and don't think I am taking an excessive risk.
Is this a new idea you are working with ? or
Is this something that you have been working for a while ? if yes how is your result so far?
If I remember correctly yes my result was breakevenish for this.
The idea definitely had some potential
wish you luck on cracking this one.
This is quite new to me. I ran my first pyramids using this grid approach from late October after about a month of paper trading it. Since then I add a pyramid entry order to every trade that I open. My trades are trend-following only so obviously they tend to move in the trend direction more than 50% of the time and they often don't have a "natural" limit of travel, like a H&S or Triangle etc. would.
Results so far are not numerous because of my trend criteria, and I'd like to run more to be fully confident. But January was my best ever month in trading since 1999: two-thirds of all wins and nearly all the biggest wins were pyramids. I'm not taking any more capital risk than I would on a single stand-alone position off the same chart so I can't see a reason to not press on. Though capital risk remains in the early days, it never increases, though the aggregated position can be built up to way more than I would otherwise dare.
Some say win rate is the most important, some say r:r. I don't log either but both matter: my strategy is inherently biased towards both rising.
IMO second most important metric is average win vs average loss.
In your strategy an instrument that tends to have prolonged trends could work well but such an instrument will also work well in terms of scaling into losing positions on pb’s as one is buying cheaper (in a bull trend). The problem is trading instruments that have alot of reversion to the mean.
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Here is a twist. Have you tried using the methodolgy you are describing ON an instrument that reverts back to the mean alot but using it scaling into losing positions? That is, use it as a method to scale in. Scaling in by the grid!
I generally scale in by steps with each step being at least the min scalp i would want to play in an instrument. If volatility is high that day then that scale in step naturally becomes bigger. In other words, the scale in point is dynamic and differs according to the price action of the day.
I generally scale in by steps with each step being at least the min scalp i would want to play in an instrument. If volatility is high that day then that scale in step naturally becomes bigger. In other words, the scale in point is dynamic and differs according to the price action of the day.
Not deliberately. I only take trend-following trades, that's what this grid/pyramid system is built to capitalise on. So a trade might unintentionally be on a mean-reverting instrument (probably in the wrong direction) but I'm blind to this characteristic when selecting the next target. I look at S/R when trying to find a stop-loss price and this could coincidentally line up with the limit of travel on a mean-reverting instrument, but I ignore all forms of resistance in uptrends and support in downtrends.
Apart from which, mean-reversion works until it stops, and surely you only know its stopped mean reverting when it doesn't, by which time you're already in the trade?
I don't see scaling in gives optimum return. I want to be in the trade up to my capital risk limit right from the start or else I'm in cash.