Profit Factor This value is the profit generated by profitable trades divided by the losses generated by losing trades. A value of 2 would indicate that twice as much money was made from winning trades than was lost from losing trades. Higher values indicate less risk. You have to remember only google....
Krsna I saw your post about your confidence of average stop loss for the next 100-1000 trades. I wish I come to your level of detached strict stop loss adherence.Would you share your wisdom on which contract you usually trade ES/NQ/YM/ER2? what is the maximum string of stop losses you encounter under 10.8 tick stop loss rule before you score say +20 tick profit.I have not done research about your old threads which I will do later. Iam mostly in option game on the Spy,IWm apart from occasional option play in oil,commdity,steel stocks. Never traded the underlying futures(scared) much ,where as I will enter 20/50/100 contracts (debit premium )on SPY/IWM ATM/OTM options & scalp .10/.20. But to get that .10 ,the future has to move 1.5 to 2 points! To make my life simple,I want to trade only futures with a strict rules.Could you share your wisdom? Any suggestions on indicators,chart set up,time frames? Thanks
PROFIT FACTOR From a sample of 500-1000 trades. After deducting all commissions. NET GAINS /GROSS LOSSES under 1.5 most traders 1.5 = marginal traders 2.0 = Trader 3.0 = Super Trader 5.0+ Master Trader
There is no fear in the present moment. Most of us come to trading to make money but discover we need to learn how to free our consciousness from fear before we can open the treasure chest. To cleanse our consciousness means avoiding criticism, aggression, violence, thieving, falsehoods, double dealing, hatred, intolerance. To start the process you first need be honest and admit they are there. Then simply observe them but do not act on them. You get in a trade and you feel fear, just OBSERVE it, chat to it. "hello fear, you still around, not much for you to do here at present, I have the stop in and my target is set. But hey, feel free to hang about." This clears your consciousness of fear over time. Trading just gets a whole lot easier when your new consciousness is clear. The very first lesson I received in trading was from a trader I met in LA. He told me to go get a job as a broker and watch how people lose. I did and the first big client I worked with turned $20,000 into $50,000 in a month and into -$100,000 drawdown in 3 months trading stock futures! This was way back in 1986. How did he make $30K so fastt? Tips, a bull market and no stops made him $30,000 in the first month. Luck. How did he lose $150K so fast? Tips, a bear market and no stops lost him $150,000 in the next 3 months. His average gain was $1000 and average loss was $4,000. Lesson learned. Never forgotton. He paid $150,000 to teach me that. I have seen traders sweat in pure fear and I mean really sweat till the floor was soaking. You can learn the most by studying how others lose and then by studying how the masters win. Trouble is there are more losers than masters. First define the stop necessary for the time frame. Shorter the time frame smaller the stop harder the analysis. Look for a market with liquidity and get to know it well. Do daily, weekly, monthly charts on them and study the trend. Then look at hourly, 30 min, and 15 min. Then go smaller till you can decide what time frames suit you. Open a simulation account and trade realtime demo to start with. Use an execution service like button trader or ninja trader to place trades. ( I asked ninja to add the PF which they have) When your PF is at 2.0 turn on real money. Remember the Law of Large Numbers. Statistical analyses gets more and more accurate as the sample size gets bigger and bigger. KEEP RECORDS. The great thing today is programs like button trader and ninja trader keep them for you. They keep you honest from your lower self who is prone to cheat. I only trade futures, so cannot speak about options etc. All stock indices are good to trade as are bonds and currency futures. Little bit of help for you.
In trading, if you need stops to make a little money, you don't know what you're doing. Getting out should be rigorously defiened from four trading strategy, not from some hearsay magic little stoppie secret. Only use stops against unforeseen catastrophic events.
That's some really sweet advice there, cost me about 5 G's alone to learn the truth of it (I think I got off cheap ). edit: and hundreds, and hundreds of hours in front of the computer ... and
That's how I trade'em! ... so it's ALL GOOD info, by implmenting it, a trader will definitely be on their way to consistent profitability. Morn'in Jimmy Jam
<i>"There is no fear in the present moment. Most of us come to trading to make money but discover we need to learn how to free our consciousness from fear before we can open the treasure chest. To cleanse our consciousness means avoiding criticism, aggression, violence, thieving, falsehoods, double dealing, hatred, intolerance. To start the process you first need be honest and admit they are there. Then simply observe them but do not act on them. You get in a trade and you feel fear, just OBSERVE it, chat to it. "hello fear, you still around, not much for you to do here at present, I have the stop in and my target is set. But hey, feel free to hang about." This clears your consciousness of fear over time. Trading just gets a whole lot easier when your new consciousness is clear."</i> Excellent, excellent words of wisdom there. So many failed traders never fathom this reality of success in our profession. Financial markets are counter-intuitive and counter human emotion. They must be... that is how financial markets survive. Failed traders continue to press their best attempts at logic and emotion harder & harder while trading results become worse and worse. With that comes cynism, frustration, anxiety, anger, depression, etc. In my opinion, all of those negative human emotions are attempts to deal with stress, i.e. the real feeling of no control. In reality, the only control we have in trading is fear management. Accomplish that, and the destructive urges to over trade = hesitancy to trade (same affliction, opposite reactions to fear) are replaced by gradual evolution to success. The holy grail in trading is self-management of oneself while using an approach which has positive expectancy to profit. The most well-tuned trader using a failed approach cannot succeed. Likewise, a method or system with 75% win rate and 3/1 profit-loss ratio will not be profitable for someone who cannot properly manage oneself. It's not the system - method alone, and it's not the psychology alone... the pairing of both is critical for consistent success.