Good description... don't forget you sometimes take MASSIVE booked losses the size of several winners
LOL. lindq ain't giving nothing away. Try this.....throw a 20, 22.5, and 25 MA on the 1 min chart. During the opening hour watch and study how far the price moves away from these MA's. Develop a typical range based on your observations. When you that information buy or sell the move away from the MA's in the area that offers you the highest profit potential. Based on my experience you can't successfully trade a mean reversion system with tight stops and/or 1 entry.
A good suggestion. The market tends to ride the 2.5 BB. If the price penetrates deeply into the bands while it makes a sizable move away from the MA's then there is a high probability the price will revert. If you are not willing to sell a price that is pointing straight up or buy a price that is pointing straight down you will never be successful trading a mean reversion technique. You have to be able to develop blind faith that, "it ain't going no further without some sort of correction" and if it does you have to be ready, willing, and able to buy or sell more. You need a strong stomach to use this kind of method.
This is a good point. Your average loss will most likely exceed your average win but your aim is to offset that by a high win rate. You can't bat 50% and expect to win with this method. You need to do at least 80%. MR is not an easy method to trade but the primary reason I trade it is because I don't have to guess when the next move is going to occur and in which direction. I know I can't time the market so I don't even try. I wait until a move occurs and fade it when it gets over-extended or when I think it has come to an end. I never put the entire trade on with 1 trigger unless the first trigger happens to work. I use the size of my account and small positions to manage risk but NYOB brings up a great point....occasionally you're gonna get wacked!
Here are my words 1- Can we make higher high in up move or lower lows in down move. if we can then stay away from counter trend activities 2- is the support broken? ( see the attached photo ) 3- have an eye on 5 and 10 ATR, if we complete the 5 ATR before noon you can go against it. 4- Have we broken yesterdays highs and lows I personally like to have an eye on 5 min ES, RSI and MFI. I like to confirm the reversals with shooting starts with high volume. Some times you need to re-enter the position but do not over trade it.... Cheers
I'm not trying to take anything away from your strategy because there are many ways to skin a cat but I don't trigger <i>unless</i> we go to a new high or a new low, unless it is during the first 1/2 hour where the greatest volatility tends to occur and V-reversals are most likely. I'm particularly interested in where stops are located, which is above recent highs and below recent lows. The highest and lowest points on your charts are where I would be the most active.
For some reason I thought you used MP. If so, can you use the upvol/downvol to give hints as to if the the market will stay in the current balance or if the arket will break out into imbalance? Clues to trade Reversion to the mean....etc
And they also both fail; in fact, miserably. So much so that 95%+ traders lose money, including you I bet.