Discussion in 'Journals' started by expiated, Dec 3, 2017.
A slight, but very helpful, refinement:
Not counting my first three trades during this round of sessions (which were made for the purpose of gathering information more so than for gathering profits) my success rate for today would have been around 95% rather than roughly 83%, so at this point, I’m satisfied that my system is valid and I can stop evaluating it and just trade it.
I think I’ll go back to focusing on finishing the book I started describing how I approach trading currency pairs online and kind of abandon this thread for awhile.
I really liked the setup on the chart I used January 13th (post #94), but realized at the end of Friday that it was no longer being incorporated in my current setup (post #100), so here I have combined the two:
In that I’m finished testing my Multiple Simple Moving Average Envelope Strategy in the Forex market, and given that I have an MT4 demo account that will allow me to trade a basket of about 19 stocks on a virtual basis, I’m now hoping to adapt this system to equities and have therefore compiled the following list to help get me started.
BABA - reaching new highs
FSLR - just turned bullish @ 70.48
RACE - just turned bullish @ 119.93
SU - don’t buy for now
GS - buy signal @ 268.02
AAPL - don’t buy for now
AMZN - reaching new highs
FB - take profit @ 189.87 (might have just hit resistance)
GOOG - might have just hit resistance @ 1174.66
JPM - might have just hit resistance @ 116.04
MCD - take profit @ 178.27
TWTR - very bullish
XOM - buy with next dip
BAC - might have just hit resistance @ 32.14
VRX - don’t buy for now
GPRO - don’t buy for now
WMT - reaching new highs
TSLA - don’t buy for now
PG - don’t buy for now
I wanted to reconcile the five-minute charts I was using with my one-hour charts, but haven’t had the time.
Instead, I was experimenting with trading foreign currency pairs on one-hour charts in place of my usual 15-, 5- and 1-minute charts to determine how much leeway I would need to give myself for me to be able to place my orders and then walk away from my trades without being stopped out due to the shenanigans of those pernicious market makers, so that I would no longer need to micromanage my positions.
I also wanted to see how quickly I could return one of my demo accounts back to its original $100,000—but I ended up trading it back down to half of that instead.
However, this gave me opportunity to begin finalizing the rules to my system so I can include them in my book, which should be finished soon. I am therefore posting the rules here, nix the intellectual property they contain, to assist me in the process of verifying their accuracy and validity, identifying any omissions, and fine tuning any aspects of the guidelines that need adjusting.
Hopefully this time the demo account will grow instead of shrinking!
ADD: "Readjust the take-profit target each hour as the moving averages and moving average envelopes update."
MODIFY: "That being said, our first rule is that the only time we will make trades is when the candlesticks have made contact with the upper or lower band of the green, intermediate SMA Envelope ( ) at % deviation, or when the blue-violet, short-term, SMA ( ) oscillator hits the 1.789 level of the Price Anomaly Channel on the side opposing the direction of the week-to-week trend, as indicate by the orange SMA ( )."
After five hours all ten trades have returned a minimum of approximately ten (or more) pips profit.
I'm not sure if it was this thread or another, but you mentioned a 1:1 reward/risk ratio.
With an 80% win rate, were you still achievng 1:1?
If so, why switch? Not enough trading setups?
I don’t know what I might have typed previously, but I’m no longer really experimenting all that much—just fine tuning my targets, so I’m being much more selective about which positions I enter.
At a 90% win rate (or better) I’m not trying to achieve a 1:1 reward/risk ratio. Currently, it pretty much varies between 1:1 down to perhaps 1:3.
I know every trader who abides by conventional wisdom will give me grief over this, so I chose to delete my stop loss levels from the above image.
For me, more important than the establishment’s edicts on reward-to-risk ratios is my selection of which opportunities to pursue, primarily in terms of their structure and how the different components (moving averages and moving average envelopes) relate to one another.
I’m in the same Camp as Mark Rose…
“One of the key misunderstandings and prejudices I see again and again, even among experienced traders and so-called experts, is the cry I hear repeated so often that we should all be trading with a ratio of 2:1.
“Risk reward ratios are no judge of the profitability of a system. To really see whether a system has an edge, you need to know the success rate. A lower reward ratio will inevitably have a better chance of winning, so what matters is matching up the two statistics in a way that suits you: reward ratio AND success rate.
“Neither type of trade is ‘better’ than the other. They are different trading styles, and each has its merits. Whether you go for 3:1 or 1:3—or anywhere in between—what’s crucial is that you’ve still got that all-important edge.”
Separate names with a comma.