WHAT IS A SECOND ENTRY ?
- Thread starter padutrader
- Start date
if i am dead ,no
yes consistency is the main thing.
there are 3 days left in the week
let us see if i can repeat it for 3 days to start with
you asking a lot of questions..... are in police or the Gestapo / SS
Just trying to educate you and open your eyes, buddy.
Doesn't Al Brooks teach expectancy? Understanding expectancy is key for any trader.
Risk 12 ticks ($150) to gain 4 ticks ($50). Let's take a closer look...
If we factor in costs at $5 per trade, you need a 78 % (!) win rate just to breakeven. Read that again. 78 % to break even.
Buddy. You can get it right 78 out of 100 trades and you're breakeven. Imagine that. 100 trades and you're breakeven.
Here's a basic Monte Carlo simulation for that system (model account is the flat arrow) with various runs around that. Just by chance, you'll have a few bad runs and a few good runs. Many traders are fooled by randomness.
At 85 % win rate your average expectancy per trade is $15. An improvement, but as you can see, you're not really going anywhere.
In summary, you need to win 85 out of 100 times in order to have a fighting chance.
If I were you, I'd consider doing the reverse. Set up a system where you don't need to always be right and still can make progress. Of course, do what you can to improve your win rate, but if you risk 1 to gain 3 (the opposite of what you're proposing), you can do well with a win rate below 50 %. And that's easier to sustain long term.
@Laissez Faire,
@SimpleMeLike told him that but @padutrader prefers perfection.
@SimpleMeLike said just click, click, click, buy and sell.
I tried paper trade that idea, one out of 5-10 entries was a very profitable run. I could be profitable as long as I set a very tight stop. Of course like your Monte Carlo, it was Sim.
One thing to note, however, is that the expectancy of getting 4 ticks in ES is far higher than say 12 ticks. I, for one, almost always get anywhere from 3-6 ticks as soon as I enter a trade. So if you're micro-scalping with relatively high leverage, it can work.
Of course. If you almost always get 3-6 ticks as soon as you enter a trade I imagine you won't need a 12 tick stop either and that changes everything of course.
Leverage is irrelevant for this equation, though, although of course, the higher your leverage the higher your risk of ruin. And high win rate system with an inverse R/R ratio generally aren't robust as just by chance you'll eventually take a beating where you'll give back a huge amount of profits on as little as 3 full stops in a row.
That's too bad. Shame on Al.