Intraday traders please choose: Method A or Method B

murray t turtle · Feb 22, 2006

Quote from Thunderdog:

I am curious about how people here view risk and return. Kindly consider the two methods described below and vote for the one that you prefer and that best describes the risk profile of the approach you presently use.

Method A

This method's primary objective is catching important intraday moves. The downside, all else being equal, is that it catches a proportionately larger amount of whipsaw action due to its primary objective of not being left out of sizeable moves. Further, the initial protective stops need to be somewhat looser than those for Method B.

Method B

This method's primary objective is risk control. As a consequence, meaningful moves may be missed with some regularity. However, this method generates more reliable signals and requires relatively smaller stops. Therefore, although this method may not participate in a fair amount of decent moves, it potentially enables the trader to better capitalize on those fewer signals that are generated with greater reliability.

To be fair, let us assume that neither method is better than the other on a risk adjusted basis. Rather, let us say that they reflect different points along the same risk/reward continuum. Therefore, it largely comes down to a matter of subjective preference.

Which method would you prefer to use? Any comments you may have would also be appreciated.
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Well, wouldnt exspect a hog, dog ot turtle to agree on everything;
like to study ''a'' moves, trade more like''b''.

However on ES ,[perhaps more than ER2], have missed my share of a trend day move ;
but the more birthdays i have , the less i like drawdowns/wide stops .

Yes there can be some pain by missing nice parts of big intraday moves;
but its comforting in that no one gets it all anway .
Some big trend days are fairly orderly, so you dont have to miss all the big moves with a smaller reasonable stop.

Howevec on a sloppy choppy trend moves that continues to takes out highs & lows;
like to go study an orderly trend day so it doesnt bother me so much to miss that sloppy choppy..
May be it settles down enouigh to enter, if not back to research again.

man · Feb 23, 2006

both.

due to their different nature, A being more trend following, B being more contrarianLike, they should not correlate by more than 0.4.

thus if they have the same sharpe ratio, the combination shoudl have a better.

i am afraid this is the only professional answer.

peace

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Intraday traders please choose: Method A or Method B

Which method would you prefer?

Method A

Method B

murray t turtle

man