I like that Volpri and Ironchef my hats off to you for having the patience and wisdom to spend this time on demo trades. You've done well
. Hi ironchef, Not sure if this is helpful but I prefer to use a simpler measure of profit:risk which is simply the net profit divided by the maximum drawdown. Some sources call it the Recovery Factor and others call it RoMaD (Return over Max Drawdown). There are apparently different ways to define the level of profit, but I simply calculate the total net profit over the testing period and divide it by the max drawdown over that same period. I look for a ratio of 2:1 or better. https://www.investopedia.com/terms/r/return-over-maximum-drawdown-romad.asp https://www.forexdominion.com/recovery-factor-in-trading.html
Peizoe is correct. TOS is the best in the world in options trading but their Demo account totally sucks and does not give accurate results. You have to use a platform like Sierra Charts that does sell to the bid and buys the asking price. I wish you much good fortune in your live trading but you enter it with a wasted demo effort.
Don't congratulate me yet. Successful day trading is a long game. 6 month is too short to demonstrate positivity. I am paying forward: If anyone is interested, here is a summary of my approach. So simple it is laughable. However so simple every amateur retail can try on a simulator, without any skills other than screen time: 1. I don't predict, no indicators only watching price movement on DOM, tick by tick, 1 min and 5 min charts (trading the 1 min chart, using candles on 1 & 5 min). 2. Trend following in the simplest sense, meaning enter when it looks to me like price is going up (or down), no rules just a sense of movement, pure gut feel. I have been staring at the same charts for a year and a half. 3. This is where @volpri's method comes in: look for TR, enter based on #2, set a wide stop, quickly grab any profit the market is willing to cough up. If within the 1 min bar it doesn't go positive, I exit usually at a loss. Rinse and repeat. 4. Results: ~65% - 70% of the trades were winners and a modest net profits. I am going to try moving closer to what @volpri is doing, especially adding the averaging down part and see if I can improve win rate and total profits. Take care.
Thank you for your feedback. I will go back and adjust the profit outcome subtracting the typical $0.02 haircut per round trip and see what the outcome is. Actually my biggest puzzle is the lags in order fills at times when I click buy/sell. Sometimes there is a lag sometimes not.
Don't forget to master the whittling down technique. You may need it if you are going to venture into averaging down. Especially when averaging down turns sour. I made 2 or 3 videos describing it in my journal. You might want to SIM it. See if it works for you. I most always maintain "dancing" SLs and "dancing PT" cause the market likes to dance.
I'm closely following your posts and am rooting for you! I love how you're completely honest about what you're doing and your results. I wonder about how you think you will do when trading live. I always have trouble between live trades and SIM trades. Doing the right thing, like adding to a losing position, is much easier in SIM, and I often see the benefits of this, and hence why its the right thing to do, but when doing it live, its a totally different ballgame. So I'm curious to ask if you think this will be a problem for you as well. Since you're now wondering about lags with order fills while in SIM, this right there might be what drastically changes things. Maybe the lack of fills will just affect 10% of trades, but psychologically, it might completely change the way you do things. So although I think SIM is important, there is no need to stay in SIM for too long in my opinion. All you are doing is practising a trading method that you might not be able to carry out live. When even trading 1 micro contract is tough, I find that switching to the leveraged ETFs for both ES or NQ has been quite helpful. For example, 1 micro NQ contract is $2 per point, vs. $20 for the NQ contract. But we know that with NQ, a 10 point spike can happen in a second, so a 20 point stop is likely more realistic to use. But this now means a $40 risk on every trade, without even scaling in, and if you have to assume several losses in a row, you don't want to be down $100-200 in a day. But moving to trading TQQQ (if your account allows for bypassing the PDT rule), then doing 100 shares is roughly half of 1 MNQ contract, or moving down to even 50 shares or 25 shares is quite viable since TQQQ trades thousands of shares every minute. This way, you can easily risk only $5, and since you say you have a commission free broker, even better. For me, its about 30-40 cents per trade at IB, and although this is significant if your profit is only $10, it sure beats a $40 loss and your confidence going into the toilet if you are trading MNQ. Anyway, my whole point with all this is that your stats looks excellent, but I'd love to see what you do with just minimal risk, like 25 shares at a time. Even if you have just $5 per trade on the line, think of how good you feel to make $20 in a day and how much more you gain in information about your trading method because you're trading live. You also get to experience live fills, and see if this affects you or your strategy.