I made Dodgers starting pitcher monies in 2019-2021. I've not been able to replicate the gains on notional for a variety of reasons (taxes, vola, etc), but I know that I was beginning to run into capacity issues in most of my stuff. I had to move into new edges as a result but the point of this post is that I know more now than I did then but the difference was that I had a clearly defined goal to meet. My Sharpe is higher now, FWIW. I have a vol-strat with a Sharpe >6.
The strategy is to set your exit at 5R. Enter with a bracket order and wait for the outcome. It helps to trade momo stocks.
I know that’s how some people may do it, but it seems more like wishful thinking than an informed calculation. Besides, if it’s still going in the intended direction, why exit?
Because that's your plan. 5:1. Not my strategy but would work for those with patience who don't want the hassle of managing a trade. I might be better off if I followed it.
PTJ defining his edge at 5X just offers him a mechanical out. How.many L/S funds are sitting on 50-baggers? Where would they be if they were STC at 5X? Professionals use vol as a trigger (say skew) and as an exit parm.
If you're in a DRR (defined risk reversal) at 4X then you're out at 7/2 marked as the remaining 50 beeps is trivial. Can't do that with D1 outside of say gamma swaps (but that's marked against you).
Not mine either. A long time ago, when I traded with larger protective stops, I did something like that. But not quite at 5x. The market came reasonably close but it still didn’t reach the intended target so I held. I didn’t even tighten the stop to BE. It reversed and I lost the full amount I originally risked, plus slippage. I can’t explain why I was so dense and wooden. Early days, and a misinterpretation of discipline. Doofuses will doofus. I guess that’s one of the reasons I look at how the trade is acting in real time rather than impose an arguably arbitrary target. I don’t know if that’s the right thing to do, but it’s what I’m most comfortable with.