That was already clear from start as they focused on the % winning ratio and forgot, or maybe even did not know of all other elements, and came to their "professional" conclusions. Discussing with people who cannot think out of the box, or cannot create advanced trading systems, is useless as they miss all the knowledge to discuss it. But they were convinced that they were so smart that they know for the rest of the world what is possible and what is not. Even the argument that "if the big boys with their smart employees and advanced machines" cannot do it, nobody can. If that statement would be true how could James Simmons then become one of the top traders in the world? When he started to make big money, he was a small player. Only by beating the competition, by doing something the big boys could not achieve, he could grow to what he is now. He is the perfect example that the statement was wrong. In the medical sector many new drugs are not invented by the big pharmaceutical companies, but by small players. Again showing that being big is irrelevant. How did Google, Facebook, Snapchat, Twitter, Whatsapp... become so big and why did no other company start that business? Microsoft could, Oracle could, Apple could, but not one of them did it. Again proof that the statement was complete nonsense. It's like saying this box cannot be opened (because you don't have the required knowledge), while others say it can (because they have the required knowledge):
I have no dog in this fight and I am not choosing sides. To be fair to schweiz, he did say his trend following system had good win/loss but not high (< 100%) win rate, so whenever he incurred a losing trade, he switched over to his "recovery mode" which had a very high win rate (~100%) but low win/loss ratio, this, until he recovered his losses then he switch back to trend following. This to me is his key contribution to this thread. To me his suggestion of reducing risk when one has a losing situation by switching to a lower risk higher probability approach is worthy of my consideration and I thank schweiz for his suggestion.
He is so busy trading his super system that he left that important task of making money and in a hurry speed up to give you a thumbs up.You know because this is what serious traders have on their mind @ironchef ,You are looking for answers and so did i in the past.The problem is which are good answers and which are ego gratifications It is hard game,but once you seen something that works it is easy to point out fakes,because of certain characteristics and not shaken by what they say or how they insult intelligence of others.None of that has any effect. That's my last post to this thread,done with subject of Sharpe Ratio
The idea sounds really good, and I can't fault the idea, but how does it work in practice? Sure, take a trade, risk 3 points, hope to make 10, and if you don't make 10, switch to another strategy. This new strategy though, since its making smaller gains, has to have a much higher win rate because you gotta roll the dice a few times and be right. It begs the question though, why not start with the strategy that already has a very high win rate? His suggestion that commissions is a factor is total bullshit. Commissions are only a factor for those who hope to make the spread, which hopefully nobody is trying to do anymore given HFTs and algos, or if your edge is so bad that commissions do actually make you go from positive to negative. Lets run the numbers. 1 ES contract, per round trip, is usually in the order of $4 and change. Since 1 ES tick is $12.50 profit, it means that your commission is only 1/3 of a tick. If you can make 1 ES point, $50, with an almost 100% win rate, does losing $4 really matter that much? Do you really stop trading a system that gains you one 1 point because you don't want to pay $4 and pocket $46? If you're trading 10 contracts, not an unreasonable number for an experienced trader, this is $460 profit each time you put on a damn trade. Who is going to complain about commissions when making this much money? Now you might say that trading 10 contracts is stressful, and sure it is, because most know that they are no where close to a 100% win rate. But how stressed out can you be if this is your win rate? You're only stressed out when you know you don't win 9 out of 10 times. Perhaps the trade isn't 1:1, so when he loses, he loses more than the 1-2 ES points that he gets when he wins. Lets some some simulations. Here it is, assuming a 90% win rate, taking into account $4 commissions, and using a simple 1:1 trade, making or losing 1 ES points, hence $50. People would kill for this equity curve. Ok, lets make this a bit more challenging. Lets now say that when he losses, he loses $200, so 4 ES points. This should be an exaggeration because his trend system has a 3 point stop he says, so using a 4 point stop is silly, but still, lets run it. Notice that running this simulation 200 times, the lowest PnL is still over 1k. So even this is still profitable. So you see, the theory of what he says sounds great, but in practice, there are some huge limits that need to be overcome. A rule I go by is that when anyone has extraordinary claims, its very important to be able to back them up. Unless he can, which he has already said repeatedly that he won't, don't put too much effort into following his "advice". Edit: Perhaps if he comes back to say that the almost 100% win rate does sometimes suffer a 10 point stop, well then, this is a very important clue that blows it all apart.
I like the metaphor of the impossible dove tail box. It's funny to see the certainty of it's impossibility dissolve when one gets orientated correctly. In a past life as a carpenter, it's a bit obvious of how it's constructed, no video required. It's actually pretty spot on in terms of illustrating the difference between trading support & resistance vs trading sentiment. All innovation comes from doing the impossible. There is a long line of thinking minds through time which demonstrates just that.
It is better to keep the dumb dumb, as they are too dumb to understand they are themselves the reason why they stay dumb. Because of the fact that they think they are always smarter and other people are stupid or fake... Insulting somebody who has another view on things then yourself will never motivate your "opponent" to make you smarter. Your "opponent" will just stop the discussion and leave you in ignorance. Even posting charts, Monte Carlo, start about irrelevant commission or anything else will not help to restart the discussion. It is not just about commissions, there are a lot of other things in play. At least for those who have the knowledge. Fishing or insulting to get a reaction will not help. My "advice" is for free, so there is no risk in it. In worst case you lost some time studying it. If that is too much you should stop trading. You clearly don't read what I post. My stop is ALWAYS at 3 points, so I can never catch a 10 point loss. Case closed.
If you held a loser position for that long, don't you realize it had the potential to become a disaster? Stops, my man. They are to prevent the possibility of disaster. (Just because the market came back to save your bacon this time, you shouldn't think of it as a smart play or a good general strategy.)
Thank you for your coaching. No I did not hold my trading positions for that long, I swing trade options. I just had several months of multiple losing trades. I was just wrong on enough trades to incur significant drawdown during those months. My method produces very lumpy outcomes and after 5 years I have enough statistics so am willing to live with the lumpiness. I am here looking to find a less bumpy ride with great returns but haven't found any risk free method with great returns yet.
I've found options more confusing even though I made some money at it. It was really just blind luck. Keep going, there is amazing content in the archives to assist you in achieving your goals.
I never understood why so many people trade options. Is it because you don't need lot of money? There is no 1:1 relation between the move of the stock and the value of your option. If a stock goes up 5% and you bought that stock , you make more or less 5% profits. If you bought calls it is even possible that you make no money at all even though you took the right decision to go long. Even in futures you have better possibilities. If you go long ES and the index goes up 2 points, this ALWAYS represents 100$ per contract.