i know this is obvious, but...

LongShot · Dec 4, 2002

Quote from marketsurfer:

Quote from TGregg:

Here's a strange thing I discovered one day. Create a system in your fav tool (tradestation for example) that enters a position randomly and waits for either the profit target or the stop loss. Start with both of them even, and fairly tight. You'll get about a 50% win rate, with roughly zero profit (no commisions, no slippage). (Disclaimer: I've only tried this on the Qs and NQ - but I suspect it will work on most instruments)

Then, try with small profit targets and a large stop loss - you can just about cover your commisions with the right settings on the NQ. Over the long run, anyways. It would appear that it's better to cut your profits and let your losses run.:eek:

I'm also not really, truely convinced of the usefullness of stops and profit targets, but maybe that's just due to my trading style. It seems to me that if your trading system says "The market is more likely to move in your favor from this point forward" then you should stay in. If it says "OMG, break out the whiskey." D) then you get out regardless of your losses or profits.

I mean, isn't that the point of playing the statistical edge? Guess my TA bias is showing .
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nice greg. its refreshing to see some "out of the box" thinking.

surf
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out of the box and into the fire

Breakout · Dec 4, 2002

Quote from TGregg:

It would appear that it's better to cut your profits and let your losses run

I'm also not really, truely convinced of the usefullness of stops
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Well, I've heard it all, now...lol

QQQBALL · Dec 4, 2002

Quote from TGregg:

Then, try with small profit targets and a large stop loss - you can just about cover your commisions with the right settings on the NQ. Over the long run, anyways. It would appear that it's better to cut your profits and let your losses run.:eek:
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i wonder how well that works over a long term? you're saying that the market may wiggle down some, but it probably will squirm back up for 1.5 pts. i wonder how that worked in spring 2002? man, the day it doesnt scratch back up is the day the trader is squirmimg. no thank you. i dont want unlimited loss for a 1.5 pt profit potential. no thank you.

the backtesting over whatever period may have indicated a certain outcome, but that is not guaranteed, and it would not reflect the intense pain of being down 70 or 100 pts after setting a 1.5 pt profit target. even considering the backtesting, ill pass.

thunderbolt · Dec 4, 2002

Quote from Gordon Gekko:

we've all heard before that you need to keep losses small and let winners run. we also all know that something this simple, is hard to do. for the sake of this discussion, let's throw out scalping, or any type of trading that requires a high win %. although everyone probably knows what i'm going to say, i think it's a simple concept that many people don't have under control, although they know it's important.

it's in our nature to want every trade to be a winner. i know if i were to make a trade right now, as soon as i made it, i'd want it to be a winner. because of this, it's easy to let a loser get away from us...hoping that it comes back so that it can be a winner. of course, this is not what you want at all. i know everyone knows this, but how many are handling all their trades the way they should? i won't know til i make money, but it wouldn't surprise me if a major key to trading is accepting that you aren't going to be right, and getting out of bad trades when you know you should.

of course, it is good to be right as much as you can, but the reality is that you don't need to be right most of the time. yet even when you know this, it's still easy to want every trade to go your way. this is a major issue with trading, imo. the more you let losers go against you, the harder it is for the winners to make up for the losers.

alright, i know everyone knows this already. my point is just that we don't need to be right. however, even if we know this to be true, it's still probably hard for many of us to exit losing trades fast.
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Not hard at all. It's all about recognizing a loser and reacting to it(get out fast).

BOLT

marketsurfer · Dec 4, 2002

Quote from QQQBALL:

i wonder how well that works over a long term? you're saying that the market may wiggle down some, but it probably will squirm back up for 1.5 pts. i wonder how that worked in spring 2002? man, the day it doesnt scratch back up is the day the trader is squirmimg. no thank you. i dont want unlimited loss for a 1.5 pt profit potential. no thank you.

the backtesting over whatever period may have indicated a certain outcome, but that is not guaranteed, and it would not reflect the intense pain of being down 70 or 100 pts after setting a 1.5 pt profit target. even considering the backtesting, ill pass.
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qqq,

yeah, i thought that at first read. however, the operative words in greg's post are "with the right settings". it makes sense if you are utilizing the "right settings"

surfer

LongShot · Dec 4, 2002

Quote from marketsurfer:

qqq,

yeah, i thought that at first read. however, the operative words in greg's post are "with the right settings". it makes sense if you are utilizing the "right settings"

surfer
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LOL get serious, you can *never* be sure you have the "right settings" (if even there is such a thing)

QQQBALL · Dec 4, 2002

Quote from marketsurfer:

qqq,

yeah, i thought that at first read. however, the operative words in greg's post are "with the right settings". it makes sense if you are utilizing the "right settings"

surfer
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dave,

1. right settings = optimalization via filters/indicators?

well, with that caveat i guess anything is possible. why not put the time into a more efficient system with less risk of major drawdown. quick scalps only on rangebound/oscillating day - during certain periods or after certain price action - well maybe?

2. overall, ill pas on a scalping system with no downside hedge. alot of trading is counterintuitive, so please dont think me closed-minded, but i am not well suited psychologically to that system. and honestly, that system "feels" wrong for the right reasons.

thunderbolt · Dec 4, 2002

Quote from QQQBALL:

dave,

1. right settings = optimalization via filters/indicators?

well, with that caveat i guess anything is possible. why not put the time into a more efficient system with less risk of major drawdown. quick scalps only on rangebound/oscillating day - during certain periods or after certain price action - well maybe?

2. overall, ill pas on a scalping system with no downside hedge. alot of trading is counterintuitive, so please dont think me closed-minded, but i am not well suited psychologically to that system. and honestly, that system "feels" wrong for the right reasons.

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You're hedging by scalping in a sense. You're in, then out--risk in check.

BOLT

LongShot · Dec 4, 2002

Quote from thunderbolt:

You're hedging by scalping in a sense. You're in, then out--risk in check.

BOLT
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no, he says you are in. out. in. out. in and in and in and in. that's downside risk.

thunderbolt · Dec 4, 2002

Quote from LongShot:

no, he says you are in. out. in. out. in and in and in and in. that's downside risk.
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What are you nipping on? Scotch?

BOLT