Would you qualify the quality of a trade by the drawdown taken during the trade?

[CyJackX]

We're told that we have to be able to sit through a little bit of pain to profit, but is this just because our timing of the trade was simply off?

If the initial direction of the trend is correct, but timing is off, there will be a slight negative drawdown before profiting.

However, the secret sauce is knowing the difference between a pullback and a change in trend.

A trader should actively be refining his technique in order to minimize drawdown, right? Can sharpe ratios be applied to intra-day timeframes and trades?

 

[ajcrshr]

More risk-reward focused; you should know what to expect and have an exit decided where the move fails. There shouldn't be ambiguity or nail-biting if price moves towards your exit. And no you certainly don't have to take heat to have a profitable trade lol.

 

[Handle123]

I use the MAE great deal when backtesting. Maximum Adverse Excursion (MAE)–

https://www.dukascopy.com/fxcomm/fx...l-In-Trading=&action=read&id=1861&language=en

Usually, I will use 90% of favorable drawdown to figure best protective stops.

I also use "Time Stops", I give so many bars for the trade to become profitable, it usually is 3 or 4 bars, and if price is in the negative, my new target is breakeven plus fees. I have found in my style of trading, profitable trades take off fairly quickly or I am looking to get out. Also, except for day trading, I hedge, so I don't want to be watching time decay too long on something not going direction I want it.

Good luck.

 

[Tim Smith]

just because our timing of the trade was simply off?

Did nobody ever sit you down and give you the "don't time the market" talk ?

I'll summarise: The only people with any chance of "timing the market" are the HFTs, everyone else is just kidding themselves if they think they've found the top,bottom,middle, arse or elbow !

@ajcrshr has the correct answer. You're not planning your trades properly. Know your risk-reward before you enter. Be strict on cutting your losses. Don't be afraid to "sell with regret" (i.e. take profit).

Remember "the market will remain irrational longer than you can remain solvent". Whenever people forget that saying, they soon find the market will come slap em on the face and remind them in the form of a large loss on their P&L !

 

[JackRab]

Did nobody ever sit you down and give you the "don't time the market" talk ?

I'll summarise: The only people with any chance of "timing the market" are the HFTs, everyone else is just kidding themselves if they think they've found the top,bottom,middle, arse or elbow !

Exactly. My timing is probably off 90-95% times. Doesn't mean you can't make a profit. To actually buy the exact low and sell the exact high is not doable. Anyone how says different and who thinks he can trade that way all the time is full of shit.

 

[lawrence-lugar]

Did nobody ever sit you down and give you the "don't time the market" talk ?

I'll summarise: The only people with any chance of "timing the market" are the HFTs, everyone else is just kidding themselves if they think they've found the top,bottom,middle, arse or elbow !

I have a pretty good success rate of predicting how the DOW/SPY will behave during the day, prior to the opening bell

I personally don't want to make a very bold statement as to claim 'I can time the market' -- but I like to think of myself as somewhat close.
And if i'm wrong, I have certain risk controls where my winners are generally larger than losers.

...it's the only thing I watch and trade -- so I like to think of myself as having a pretty good grasp on it,

 

[CyJackX]

Did nobody ever sit you down and give you the "don't time the market" talk ?

I'll summarise: The only people with any chance of "timing the market" are the HFTs, everyone else is just kidding themselves if they think they've found the top,bottom,middle, arse or elbow !

@ajcrshr has the correct answer. You're not planning your trades properly. Know your risk-reward before you enter. Be strict on cutting your losses. Don't be afraid to "sell with regret" (i.e. take profit).

Remember "the market will remain irrational longer than you can remain solvent". Whenever people forget that saying, they soon find the market will come slap em on the face and remind them in the form of a large loss on their P&L !

I am wondering then, how you define "timing the market." vs making a trade otherwise.

 

[Tim Smith]

I am wondering then, how you define "timing the market." vs making a trade otherwise.

You trade based on fact, i.e. what is actually causing the price to move.

You don't trade on "timing", i.e. the movement of the price itself (or your "prediction" of it)

Real trading is Objective
Silly attempts at "timing" is Subjective

By their nature, objective judgments tend to be more accurate.

 

[CyJackX]

You trade based on fact, i.e. what is actually causing the price to move.

You don't trade on "timing", i.e. the movement of the price itself (or your "prediction" of it)

Real trading is Objective
Silly attempts at "timing" is Subjective

By their nature, objective judgments tend to be more accurate.

I feel like there is a semantic issue here.
I don't understand how one can divorce timing from a strategy. Time is a factor in every trade.
At this time in the market, these set of circumstances triggered my system.

Your objective, factual trading signals come in the stream of time. Aren't we all implicitly timing the market?

 

[Tim Smith]

I don't understand how one can divorce timing from a strategy. Time is a factor in every trade.

Today's markets only further exaggerate the necessity to divorce timing from strategy.

In Today's markets, any decision you make is based on "right now", i.e. this exact nanosecond in time.

As a retail trader its a pointless activity to try to convince yourself that "this nanosecond is exactly the right time for my trade". Its not "the right time", it will never be "the right time" because the HFTs, algo funds etc. will always be one step ahead of you. They can get new data faster than you and they can act on that new data faster than you, and they've got a lot more money to play with than you.

In the next nanosecond, an algorithm could go nuts, a moron could post a false rumor on Twitter, so whilst you may have thought "this nanosecond is exactly the right time for my trade" a nanosecond ago, it no longer is now.

What you need to do is forget about worrying if its the "right time", but whether it makes sense to place the trade based on the objective data in front of you (i.e. factual data like news and company results , not subjective stuff price activity).

The exact timing of the trade really shouldn't matter, 9am after you've had a dump or 2 minutes and 30 seconds after 11am .... who cares. As I said, today's markets can change in an instant, and you're really playing with fire if you set your trading timeframes too small.

Which is why you need to spend more time figuring out how to evaluate risk and less time trying to time the market. "The market can stay irrational longer than you can remain solvent", don't fight the irrational market, learn to work with it (and play the HFTs at their own game by setting yourself a more relaxed timeframe).

Just my 2c worth !