Any guy making money using risk/reward ratio >1?

Discussion in 'Trading' started by hermit_trader, Nov 25, 2002.


  1. Does it mean this ratio is only suitable for very short term trading?
     
    #11     Nov 25, 2002
  2. The successful traders that I know of trade this way. In my own trading, about 80-90% of my trades hit my profit objective; the other 10-20% are losers because they hit my stop.

    In every trade, my stop is about equal to 150% of my profit objective. For example, if my goal profit is $2, then my stops are usually set about $2-3 away from my entry.

    The whole key to achieving 80-90% win rates is knowing where to take profits and where to set stops. There are good places, and not so good places.

    I much rather prefer to trade this way. In fact, I think that it does makes the psychology, dicipline, and overall attitude of trading much much easier. I know that the vast majority of my trades are going to win, and it gives me much more confidence. In fact, when I check the status of my trades the next day, I'm usually surprised to see a loser, and even then my usual reaction is, "well, I'll get em next time."

    To me it's much less stressful to trade this way. I just don't have the diciplince and stomach to see myself having losing trades day after day. Just depends on your personality.

    It's a very very very very common misconception that your winners must be much larger than your losers in order to have positive expectancy. I don't know why most people perpetuate this misconception. Of course, most if most traders averge a 50% hit rate, then this strategy is doomed to fail.

    Now, I'm not saying that this strategy can apply to everyone, but if your averaging 80-90% winners, taking a 1-2x loser is not gonna hurt you. Now, the wrong approach is setting your stops about 3-4-5 times larger than your winners. You'd better be winning >95% of your trades to make it then.

    But, it can be done, and for me, it's much easier psychologically to have almost all of my trades profitable.

    eugene
     
    #12     Nov 25, 2002
  3. No offense partner, but I'll have to see it.
     
    #13     Nov 25, 2002
  4. mark1

    mark1 Guest

    you never seen a system performing 80-90% hit rate ?

    why do you assume there's no such system ?

    ok Im gonna show you one....next post
     
    #14     Nov 25, 2002
  5. yep, that's right
     
    #15     Nov 25, 2002
  6. it blows my mind that he actually makes any money...

    if he does, then why the hell does he send me all that junk mail?? WTF??
     
    #16     Nov 25, 2002
  7. yeah...so lemme guess...you've been trading about 3 months with a 5k account, and you pull the trigger about once every 2 weeks..?
     
    #17     Nov 25, 2002
  8. mark1

    mark1 Guest

    Now I don't know you, but everyday I thank God for this EOD system.

    I ran this test on a list of 218 Nazstocks (those having a 60 ma of the daily volume > 1000000 on Nov 21 2002).
    1000 bars (about 4 years)


    The system is long only, and slippage usually is at minimum cause the system buys on weakness and sells on strength.

    Now guys, half of you won't believe these figures , and that's ok.
    For the other half ... DON'T EVEN THINK ABOUT IT !

    Not to be rude guys but took me 3 years to develope it, 6months of paper trading(watching the system making money without me...), 6 months to trade it properly(you always think you are better than your f@#$% sys. you moron), and finally 2 years of real money

    Commissions are calculated (Interactive Brokers fees)

    Max number of Stocks * trade = 2000 ( I want to be sure to go in and out quickly of position with minimum slippage and I want to keep my blood pressure low).


    %of equity per trade 20
    Starting Capital $25,000.00
    Ending Capital $532,060.88
    Net Profit $507,060.84
    Net Profit % 2,028.24%
    Exposure % 6.34%
    Risk Adj Return 31,971.64%
    All Trades 571
    Avg Profit/Loss $888.02
    Avg Profit/Lo % 3.89%
    Avg Bars Held 1.13


    Winning Trades 514 (90.02%)
    Gross Profit $648,898.06
    Avg Profit $1,262.45
    Avg Profit % 5.46%
    Avg Bars Held 1.03
    Max Consecu 30


    Losing Trades 57 (9.98%)
    Gross Loss $-141,837.34
    Avg Loss $-2,488.37
    Avg Loss % -10.20%
    Avg Bars Held 2.00
    Max Consecu 3


    Max DDown% -9.59%
    Max DDown$ $-26,178.47
    Max DD Date 4/14/2000


    Recovery Factor 19.37
    Profit Factor 4.57
    Payoff Ratio 0.53
    Standard Error $51,950.80
    Risk Rew Ratio 3.08

    ps. Pardon my English
     
    #18     Nov 25, 2002
  9. I know what you're saying bung, and I can appreciate that.

    But, think about it. When his daughter got old enough to
    trade, she won the damn cup,too. Just luck? I doubt it...
    I think daddy knows what he's doing.
     
    #19     Nov 25, 2002
  10. Well, I have to admit, that's the best damn system I've ever seen. :cool:
     
    #20     Nov 25, 2002