Do you typically try to have a favorable risk:reward ratio on your trades? For example, risk 0.20 cents to make 0.60 cents. A major challenge that I'm facing is the fact that a favorable risk:reward often reduces the probably of a successful trade. Averaging down (scaling-in) usually improves the probability of a successful trade, but adversely skews the risk:reward ratio. Only if there's a way to obtain the best of both worlds, improving probability of sucess with averaging down (scaling-in) while keeping a favorable risk:reward... Any help with this paradox would be appreciated... thanks, Walt
Really boring trading this shortened week. Intraday mean reversion recorded one trade for a profit of $155. Half my profits were long positions I have been holding through this pull back that I am now mostly out of. +19,400 gross on 518,000 shrs. Daily p/l Tuesday to Friday was: +2.7, -2.6, +9.3, +10 17th profitable week in a row, which might be a record (there I go jinxing myself again). I usually average one losing week every six.
hey Cory- How did you handle the big one day loses BACK IN THE DAYS when you were relatively new to trading. like ur thread thanks
how do you hedge OPG, intraday and/or for your multi-day swings? how much total exposure to either long or short side can you tolerate (intraday and multi-day)? in my trading, i hedge "intuitively" and it seems that on average the hedge eats quite a bit into profits. maybe it is a reasonable price to pay for smother equity curve, who knows.
I only have one strategy that involves hedging. It's kind of a relative value stat arb strat that holds many stocks at once and I start adding spy if I get too skewed long or short so that my p/l is not depending too much on market direction. I've experimented with hedging to offset bad positions, but found it was almost always better just to exit the bad position.
This thread is very appropriately titled. Kudos lescor for sharing. Years ago you were actually humble enough to directly respond via email to me with an important question I had at the time. There is a school of thought amongst some that the trading game is something you learn the hard way; you have to pay your tuition. Well after a little over 10 years I certainly have as cumulatively and collectively speaking I am down $183,425. Reading through this thread has made me reflect on allot of my trading past. The first few years were pretty solid. I was basically flat end of day. Did not use much leverage and was conservative. At one point, the only point in a decade, I did find a bonified edge. You have no idea of how exciting this was. It was like my own little ATM machine. I thought my time was coming and I would be pulling down 6 figures per month. The edge was pretty scalable but between at that time less favorable commission fee structures and topology transition change from DOT to SUPER DOT my ATM like edge was literally extinguished. From there I moved into futures and options along with taking higher leverage speculative positions with stocks. For nearly four years it was a roller coaster. There would be months where I would put together back to back to back 3 or 5 baggers, but then a month later lost most of it. But ultimately of all the thousands of trades I completed over a decade, it came down to only 8 monster life changing trades. Had I not stopped myself out and saw it through or stopped myself out when I did see it through, my current performance record would be on the plus side and in the 7 figures. But thats how it goes. The moral of the story is don't do things half ass like I did allot of times. If you can not grind it out day after day, then you are only as good as your last trade. You essentially are waiting for that one big black jack like hand where you manage to go all in and it results in a 10 or 15 or 20 bagger. But its allot easier knowing your hand was 21 after the fact. Reading through this journal enforces allot of the positives with respect to this profession. If you have the aptitude and are dedicated enough and seek out the proper channels and people, nothing can stop you. Thanks again for taking time in doing this thread. Oh and don't feel too bad for me, last year I migrated into fixed income. And was fortunate enough to lock up some top trench corp notes on the cheap with double digit yields for the next 20 and 25 years. In addition to this, I have incorporated a very responsible accumulation program as well going forward. My total annual returns will be in the neighborhood of 9-11% with basically no principle risk. When you factor in the compounding effect, I should get all my money back in like 12-15 years.
But you must have some idea. For example the last day or so even though you trade without stops, was the amount that you won on a winning trade greater or less than on a losing trade. Also, I assume without using stops or profit targets and getting out based on time, if a major news report hits, sometimes you would take a big loss or have a big win, or do you stay out of the market during economic reports? Also, I think you mentioned on average your win% was around 60%, but please feel free to correct me if I am wrong. Finally, do you ever average down, average up, and/or scale out of winning or losing trades?
Hi Lescor, I'm cannot grasp the logic of not knowing or calculating your r:r on your trades. At the very least, money management dictates that a conservative person "grinding it out, day after day" would not risk more than 2% of their trading capital on any one trade. I know that Acrary and a few other very successful traders (including yourself, I think) have given similar advice on money management. Whether it's a mental stop or a hard stop, one needs to have a predetermined "uncle point". Is is safe to assume that you have a predetermined stop on each trade based upon some money management criteria? If this is true, then you effectively have a "risk threshold". Based upon your average ticks captured when you have a winning trade, you would tend to know your "reward threshold". In other words, for each trade, do you go with a "gut feel" or do you have a predetermined range for exiting (even if you scale out of your trades)? You gave the stats on the number of shares trades and the gross earnings. If you consider only the winning shares traded and the number of ticks earned, then an average "reward threshold" would be derived. Overall, it seems that you are implying that your exits are mostly discretionary, although you knew to exit the SWM trade because it continued running without reversing direction. You stated in another thread that your break-through came when you realized that... "the number one thing that's helped me is to make it a core belief that I absolutely, positively never know what's going to happen with a trade, since each result is a random event. This way I have no attatchment to a position and the result of each trade has no bearing on my ego or emotions. I accept that trading is just a numbers game. Each trade is random, but over time you'll make money if you manage risk properly (assuming you have some kind of edge)." Is this still your belief? If so, I'm absolutely perplexed that you don't have specific predetermined entry & exit points that is based on "risk" and "expected return - reward"... thanks, Walt