Since this is the second time I have seen this in this thread I just wanted to know if this is truly an RTM strategy? If so which "mean" are these stocks reverting to? I saw this as more of a relative strength/weakness type strategy but I may be mistaken. Thanks in advance for the clarification.
Thanks, the disclipline comes from knowing and believing what my winrate should be. I have a large enough sample size to see this and I just take my trades knowing it will all even out by the end of the year. It certainly isn't easy, I get super tilted sometimes and it's a struggle to stick to the plan but at the end of the day you have to let the %s do the work for you. The last RIMM short was a relative strength entry.. I already had RIMM on major short watch going into the day so I was open to hitting it short anytime it presented an opportunity. If you look at the bar before i entered on RIMM it was a tight red bar where as on SPY it was a big green bar that almost takes out the prior red bar. This is where you see geezy and i saying "RIMM no no bounce". With that we just need to figure out entry, stop, tgt. In this scenario I just use the prior bar, entering under it, stop over it and tgt at 2x stop size. As for the GS trade.. Why didn't I take it 2 bars prior, I was probably still driving into the office at that time. I remember I logged in and geezy called GS to me and I just slammed the short once i saw the setup..
No, this is not an RTM strategy.. He was referring to the mean which I believe my win rate should be. This is approx 50% based on my own statistics as well as geez's (8 years of stats).
I have to say, that I have found only few threads, that interested me a lot. The top 2 are Aneks AHG thread - Profitable Strategy for Struggling Traders (http://www.elitetrader.com/vb/showthread.php?s=&threadid=99283&highlight=ahg) and Geez+Puddles thread. I have started to read this thread one year ago and have read all 400+ pages maybe 3-4 times. The pages that interested me a lot (ideas of Geez) can be found here: pages 73,83,95,98,104,150,153,154,159,174,233,239,270,302 To puddles: It is nice to see, how good you are able to trade. Win (2R) - Loss (-R) May: 17 - 14 June: 30 - 46 July: 31 - 35 August (till now) : 35 - 34 So wenn your risk is „R“, you have earned (excl.comm.) May: 20R June: 14R July: 27R August: 36R Average is 24R. It is not important to know, how much your „R“ is now ( % of your account). Wenn you average risk (distance entry-stop) is lets say 0,2%, your max risk, wenn you use full 4x leverage can be 0,8% of your account per trade . So you will be able to earn 24 * 0,8% = 19% per month, which is excelent. Per year it can be max 1,19 exponent 12 = 8,06 = 800% (excl.comm.) But you must be able to trade the same way with increased risk. So lets say 200% is quite doable, which is very good. I would like to ask you guys (geez and puddles) a few question, if you dont mind. 1. What is your current broker? 2. How much do you pay (average) per one trade? (Buy or sell). 3. Do you use chart trader or do you place your order manually? For example in IB in the chart trader is possible to set your entry + stop + exit in the graph automatically (-R...2R), it is even possible to calculate the size, wenn you know your average risk. Thanks a lot for the answer. Wish you good luck and happy trading! Coudy.
I'm glad you enjoy the thread Coudy.. I also use a similar model of my performance and just refer to wins as 2 units and losses as 1 unit. As I progress further along I'm moving the dollar amount represented by each unit up slowly. This is my first year trading and I'm concentrating on finding and executing setups correctly. Once I master this the money will take care of itself. 1. Both geez and I trade at different remote prop firms. 2. We're both paying pretty standard prop rates (well under 1c/share) + ECN passthru. 3. Neither of us enter off charts (we both use sterling and it's a POS). We manually enter our entries and if they trigger we set stop and tgt then OCO the orders (one cancel other). Good timing on your question btw. I've been screwing up the basic mechanics of excuting my trades recently. Sizing incorrectly, setting TGTs in the wrong place, etc. I decided to write a quick trade calculator for myself that will figure it all out for me. It initially started as a .net windows form app but I decided to make it a quick web app with all the logic in javascript. I'll be posting a link to it on here and my blog shortly for anyone who wants to use it.
Puddles, Maybe just one more question before a new trading week starts . . . Do you follow the QQQQ at all for relative strength/weakness determinations for the Nasdaq stocks you trade? While the Qs and SPY move together pretty much, there are still plenty of occasions where there is some form of divergence (ie, QQQQ takes out a prior swing high, but SPY does not). Do you take any of this into account or do you let SPY be the overall proxy for market movement and trade your setups? JS p.s. I'm assuming that a majority of stocks you are trading are NYSE, thus the focus on SPY
I pretty much exclusively key in on SPY. I trying to lower complexity, not increase it. That being said, with my new found screen real estate, i now have a DIA and QQQQ chart running in a far off corner if I want to take a peek.
Its interesting to see you guys use prop for this method. How large is your average position? Do you need the leverage?
By position size do you mean the $ value of the equities in the trade or # of shares? I honestly do not pay that much attention to it, i just look at the stop size and how many shares I need to size accordingly. If that's 1000 shares of C or 1000 shares of GS, I'd rather not run out of buying power trying to take a setup. So the answer to your last question is sometimes.