Does it make sense or no? Like if you have a sell signal to sell stock A today, after selling and while looking at the charts there is stock B that has a buy signal yesterday or days ago and the price hasn't exceeded the price when the signal is generated. Would you buy into it? Or do you wait for a new signal? My gut feeling and the safe play is to wait for a new signal generated. But I wonder what do you guys think about this?
When selling a stock would you rebuy into another stock that has a buy signal yesterday or days ago?
- Thread starter HolyGrailSeeker
- Start date
Well because when back testing a single stock we do not go back in time and buy again after a sell signal.
If the market trend changes causes stock A sell signal, stock B might just be slower to react. Thus, when buying into it because of a past signal we may incur more loss and a higher probability that it hits the stop loss.
That is just how I feel and my take on it.
Think of it like this. Let's say we have a stock A buy signal at $50 and it rises a week later to $60 and generates a sell signal. You sell. Price then drops back to $50 but no buy signal is generated. Would you then place a buy because it was in previous week buy zone? Almost everyone would wait for another signal to generate.
Can you give an example of the first buy signal and why there wouldn't be a second one when the price came back to 50.
You should require a signal, a current one based on current conditions, and equally important a trade trigger each time.
Though without providing specific parameters its hard to comment much further than that. A chart pic would also greatly help.
Are you referring to mitigated order blocks? Order blocks are unicorns...they only exist in fantasy.
Signals are either wrong, late or early. So it depends.
That is why you spend a lot of time working on POST-signal tactics. In general, you don't want to wait through a drawn down larger than your profit factor x expected profit x risk tolerance.
e.g. you expect to pull in $300 on the trade, your system profit factor is 4 ($4 win per $1 loss). Than means a $75 drawdown is "normal". Then you say, will I am a wild crazy risk seeking dude, and triple that. So 225 is your "new normal risk tolerance" expectation. If you post-entry tactics allow, say $900 drawdown, that profit facto of 4 won't hold up.
Note this is different than a simple R:R ratio because you have an actual track record for profit factor to base it upon. Trades are actually entered and exited.
The problem with going in blind with a simple R:R, is that it has no basis in reality, i.e. it is not based on a 100's or 1000's of trades for the given signal PLUS, the actual exit.
That is why you spend a lot of time working on POST-signal tactics. In general, you don't want to wait through a drawn down larger than your profit factor x expected profit x risk tolerance.
e.g. you expect to pull in $300 on the trade, your system profit factor is 4 ($4 win per $1 loss). Than means a $75 drawdown is "normal". Then you say, will I am a wild crazy risk seeking dude, and triple that. So 225 is your "new normal risk tolerance" expectation. If you post-entry tactics allow, say $900 drawdown, that profit facto of 4 won't hold up.
Note this is different than a simple R:R ratio because you have an actual track record for profit factor to base it upon. Trades are actually entered and exited.
The problem with going in blind with a simple R:R, is that it has no basis in reality, i.e. it is not based on a 100's or 1000's of trades for the given signal PLUS, the actual exit.