absolutely. there are those traders who claim they trade - or at least would be able to trade with random entries (i doubt this - but anyway) - if they do - they would have to do it with wide stops of course. but i wonder what what would be the great benefit of doing so. maybe they are just too lazy or simply unable of developing an edge in entry picking. some traders would be amazed how tight stops really can be (i'm talking about ES).
I'd be interested to see how your entries compare to so called random entries. You could go back on the charts and see where you entered. Then if you went long, just flip a coin. If it's heads enter that as long, and tails enter as short and see how it compares. Only even that is not random, because some event occured to trigger a trade, and the trader still has to decide if heads is long or short.
profitseer, To enter positions randomly is ludicrous. Yes it may be a coin flip however you will get chopped up unless you have a wide stop. If you have a wide stop it would be unlikely that you would have a favorable risk to reward. Yes you may have a 1:1 ratio with a 50% win rate, theoretically however commissions will eat you up. You need at least a trigger to enter the market. Even if the market is not set up to go in the direction you expect, biased on whatever indicators that one uses, your trigger should not be random. I personal prefer pivot highs/lows. This allows me to set a good risk to reward even if I randomly guess which way the market will head. Regards, Tanp21
it don't matter how wide the stop is, as long as the target is a whole lot wider. Most of the time the market chops, no big deal, you just get stopped out. And when it trends, you might be on the wrong side, no big deal, you just get stopped out. But when it trends and you are with the trend you make money. So it doesn't matter what you try to do, you are at the mercy of the market. And the only way I know of to insure that the market trends is to keep on hand a supply of traders who think they can predict the market. But yes you are right, If everybody just traded randomly that would certainly be a ludicrous way to make money.
Why do you need wide stops with a random entry? That is entirely inaccurate. The key is not to trade intrabar. That is where you can get chopped. Trading a moving average is pretty close to trading a line in the sand. Long above the line, short below it. Take a look at the CSCO 15/200 thread. Does price just sit there and chop for days on end? NO! Using close only charts with a line is fine. "Too lazy or unable (incapable?) of developing...!" Please. Again, entries are a dime a dozen. Want proof? Just take a look at almost every method and book out there for sale. They all have great entries, but when it comes time for taking profits, their strategies become remarkably less objective. They give you one way to enter, and 10 ways that you might use to exit the trade. Lines in the sand..... oh you mean like pivot numbers generated from a simple equation that guide the traders of index futures market.? Calculate the numbers and draw the lines on the chart. And then how do you trade them... long above and short below? Hmm, being going on for years and years and somehow they are still in use. Without risking one cent, why don't you try it on your screens. Draw a horzontal line at the closing price of any time frame bar... intraday, daily, weekly, it doesn't matter. Long above, short below. Define your own exit, that is the hard part. Entries are a dime a dozen. "Too lazy or unable..." That's a bit smug, don't you think?
I'm guessing you mean the 15/200, or maybe the pivots? Or.... how self-centered of me, you might not be talking to me! I will presume you are though and say I unerstand what you mean I think. And to an extent I agree with you. Although, really... does it become a non-random entry because there was a calculation involved in determing the line. So if I say I am going to draw the line at .95 of today's close and be short below it and long above it, this now becomes non-random? What if I use .95 on one stock, and .925 on another, or whatever number I select? Are those entries no longer random because they were calculated. db' I think you have an engineering background, I am interested in your opinion here.
If you select the instrument with intent, select the MA with intent (or draw a line with intent), select the XO criteria with intent, then the entry is hardly random. If all the disagreement over random entries over these many months/years is based on a misunderstanding of what is meant by "random", then perhaps we should start over.
Is a coin toss random? If I go long on heads, how did I decide heads was long and not short? What do I do? Flip a coin to decide if heads is going to be long or short? And then how do I decide which one is going to be yes, heads or tails. So even in a coin toss, I the trader must make some decision. Is that decision random? And we haven't even gotten to the part about is the toss random. The only people who accept the theory that a coin toss is random are those who believe no force should be considered or relied on unless it can be explained by physics or whatever. Life is as random as you allow it to be. If you search for meaning, you will probably find it even in a random event.
I understand the entry perfectly, if this is the same one you've been alluding to. And if you go long when the price rises above your line, you're not making a random entry; you're simply following the trend. Or trading the pattern. If "many, many people" think this is a random entry, then they have a definition of randomness with which I'm not familiar.