Ya... the profit target is tricky, and I fully understand how stops and targets should come from the market and what its telling you, but when you're a new trader dealing with fear and all that jazz, its much easier to just follow a routine of putting on a trade, let it hit profit and stop, and be able to move on right away onto the next trade. I over complicate, over analyze, and then I'm left paralyzed. So in order to stop spinning the wheels, starting out with something very simple that has an edge after 10 or 20 trades is key. As an aside, how did you live trading stats differ from your 500 sample?
I'm heavily into fundamental analysis and intuition these days but still use technical analysis greatly. My advice for OP is to exit winners at target. Actually do it. Then and only then, decide whether you would still be a buyer/seller here. If so, put on a fresh trade with new stop and target.
I hear ya' (mine can't, either). You might find that depends on how rare they are? Indeed. This is exactly the Tharp/Chande argument against it. It doesn't necessarily have to be a "problem", though, if you "breakeven plus" on a high enough proportion of trades and catch the occasional runner. That's my experience, anyway. Well, call me biased (which I'm sure I am, from my own experience, as we all are to some extent), but I suspect this is rarely the right approach, myself. This may be true, too, if you can trade them often enough to make it pay. Certainly the figures you have for those are encouraging, but for a tiny number of trades. Next question: can you do on ES at $12.50 per tick whatever it is you're now doing on NQ at $5 per tick?
Yes, I fully agree based on the math, but this requires balls of steel, which I do not yet have. We will have to disagree here then. There is enough liquidity that trading 1 or 5 contracts shouldn't matter. Yes there might be a tick slippage in that perhaps not all 5 can be had at the exact same price, but this is minor. So if you know you can make 5 points every day, does it really matter if this 5 points is made on 1 contract... or 3... or 5? I think not if the trader doesn't get in his own way. Don't get me wrong, I do like the idea of having a runner that can capture 30 or 40 points, on a day like today, but its not necessary to making a killing. Although I look at the ES and monitor how its going to see general market sentiment, I notice that the way I draw my levels, these aren't always as well respected in the ES as in the NQ, so I'm not sure if it would work as well. The nice thing of course is that making 1 tick actually leads to a profit of sorts, as opposed to 1 tick in the NQ which leaves me with $1 after commissions.
Are you looking at the context when you are back testing? If not, then your trades don't mean anything at all.. What time frame are you trading? Last time it was the 5 second chart...
Omitted one DP..., although appears you're using it For each trade: Define the risk (know how much this one could cost) Accept the risk (take the SL) Methodically / Systematically take profit btw.., reading his new book now..., I'll let you know how it turns out RN
LOL... you remember me well, and this is still correct. I do follow a 5 sec chart, 1 min is right beside it, and 5 min is on a second monitor and where I get my key levels from. Context is absolutely key, and all I'm really looking to do is to buy at support, sell at resistance, or sometimes get into a trend if it looks as if swing lows on the way up will hold as price comes down again and vise versa for down trends. Essentially I'm mostly looking for reversal trades. (but this could still be a reversal in the direction of the trend, just catching it on the pull back) I should point out though that this sample didn't have anything to do with backtesting. I wasn't looking to take just one type of setup as I find this very difficult to do. Each instance looks different, each has different parameters, different context and all that jazz, so I find this difficult. All I wanted to see was that, regardless of whatever made me put on a trade, if it had a consistent stop and target, would this have given me better results than my micro managing, and this was clearly the case. Then working backwards in some ways, if others had a 67% win rate on a -3/+5 risk:reward ratio, was this in line with what could be considered a good edge.
Yup - as always - what he said "Take the SL" Sorry RN, my Aussie<-->Redneck translator is acting up.... Do you mind me asking.... Are you saying that the way to accept the risk is to have your SL set in stone regardless of what happens after the trade is triggered? Is that what you mean by 'Take the SL'?