Registered: Apr 2012
04-15-12 12:53 AM
Quote from Handle123:
In my concentration of trading/backtesting, I don't work on winning percentages at all, I concentrate on keeping losing percentages extremely low, once you can acheive this, you can average down on each level, so even a breakeven trade on original signal trade, you make a ton on all of the add-ons exiting at that breakeven price of original entry. My breakevens for the week are split with winning trades normally which is more than fine with me.
Whether one uses ticks or dollars really don't matter, so long as one is consistent in their backtesting and trading. I have traded so many many years using minutes, would mess me up too much as I have developed patterns that normally develop through the day.
Hey, thanks for the post and sharing your ideas!
I'm pretty sure...High winning percentage = low losing percentage. Same thing right?
When you speak of..."Average down on each level" Are you talking about doubling down on losing positions? The only time I do this is when I'm trading bad, and when I do it, I consider it a major trading mistake for me. Too risky imho. There will be times, for certain, where the market does not come back to breakeven on the original entry, and you can get burned. Even if your losing percentage is only 0.000001%
I'm not consistent in my position sizes, so my trading stats would be flawed (from a pure trading perspective) if I mainly looked at dollars (versus ticks/points). I monitor dollar p/l of course, but the significance is that it is not MY FOCUS. How good would a doctor be if his main focus through the day was on dollars, an attorney, any professional? I feel a strong need to focus on PROCESS, and to me ticks are much more pure and the same for everyone, than dollars are.
I've had a few days over the past two months where I've made really good profits for the day...that is looking at dollars. BUT if I look at how many ticks I took from the market that day, it's pretty bad (or even negative!) This usually means those "nice" dollar returns I made for the day, turn out to be very poor on a risk-adjusted basis.
My main daily measure of performance is what I call daily PMR. That is Profits to Max Risk. (Daily P/L compared to the largest risk I took that day) If this PMR isn't greater than 1, I'm not happy with my performance.
Just the way I think about things. Thanks again for sharing!