So, if you have, say, 4 good setups

Discussion in 'Trading' started by Ansare, Aug 31, 2012.

  1. Ansare


    Why wouldn't you just use THE best one, period? Sure, if you are a long-term investor that might get a tad boring, but for us daytraders, why don't we do that? Or maybe YOU do?

    Seriously, when this thought jumped into my head last week I felt, well, pretty damn stupid. Yes, I always try to take high percentage trades but until last week it never occurred to me to take ONLY the single highest percentage trade. And, before anyone asks, yes, I did that this week. Took literally 1/2 the number of trades I usually do and had a great week. And, yes, it was much more boring but I think I can live with that.

    So, am I just a little slow or is this a realization that eventually comes to everyone only when the lesson is truly ready to be learned?
  2. Handle123


    What do you do if you have eight best setups and they all have same low losing percentages? Not all setups may be for all day long trading, some might be for 1st 30 minutes of day session, some for lunch time, some for reports. Have you backtested back enough to figure out best times for all of them? One of the problems for me long ago was some days provided no trades for my best setup, then others kicked in and I watched all the money I lost out on cause I didn't have a clear enough idea of WHY I wasn't getting trades. It is similar to when I get like 3-4 in a row breakeven trades-only now I know why, market is in tight chop. And now I know how to correct-being more patient and getting in on deeper retracement or higher/lower in range.

    So I have to ask, what is wrong with the other 3 setups and what will it take to make them as profitable as your best setup?
  3. Ansare


    Well, frankly, if you know anyone who has 8 great setups please congratulate them on a regular basis. I would argue that if someone has 8 that with a gun to their head they still would be able to rank them 1-8.

    What is "wrong" with the other 3 is that they're not as good. Not trying to me smart ass but they simply don't yield the same success rate the best one does. My best trade setup will work in a strong or weak trend. When chop shows up I generally stay far away unless I have some overwhelming reason to take a trade, and I rarely do.
  4. If a setup has a lot higher percentage win rate... You can quite a few percent more leverage relative to the win rate difference without a problem.

    IMO, it's better to lever up a bit more for the good setups.
  5. I'm in the market all of the time.

    My view is that the market has a sentiment and being on the correct side of the market is appropriate at all times.

    I was wondering what % of RTH you are making money. I suppose I am asking to get acquainted with the quality of your set ups.

    The mathematical limit of having what you define as "setups" is a large number of "set ups" that keeps you in the market with all of your capital all of the time.

    Your analysis indicates you go into the market fewer times and now you make more money. This is a great strategy for you to use. Are you "all in" when you go in? Or do you have capital still on the sidelines that could be used in an entry or a "non corrolated (not sirectly corrolated) sort?

    Are all of your "setups" non corrolated (not directly corrolated)or inversely corrolated or something else?
  6. Ansare


    Assuming RTH means regular trading hours, I still can't answer that question. I trade only /SI and as you probably know it's 8:25 until 13:25 but have no idea what % of time I'm in the market. If I had to make a reasonable guess it's 25-50% but that's the best I can do.

    And, no, I am certainly not all in at any one time. Shit happens and I don't plan on getting wiped out because of the proverbial swan. Congrats to you and anyone else who feels comfortable enough to do that.

    When I hear the word correlated I think in terms of the product vs /ES or SPY. If that's what you mean then, yes, there is certainly some correlation. But I don't think that's what your asking.

    Should have known, Jack, when you ask questions you ask QUESTIONS. :p
  7. Handle123


    One of the ideas that came to me long ago was "delayed entry", on lesser signals it can work much better. Say you have a entry to go long, instead of going long at that price, wait for market to come back 65% of the swing and enter there, risk much less. When am in the mood to do trend signals all day, during 4.25 hours I normally do non-trend signals, I will do 50% back after getting the confirmed signal to enter, now granted I will miss some good profitable trades that don't retrace back, but my money management rules are good enough that if I am thinking of it becoming a breakeven trade, I will target the original price I was supposed to have gotten in as my exit, so the trade actually will make me a few ticks.

    But if the other three setups are truely not even 55% profitable, then you thoughts might be correct.
  8. VinMan


    I go with my best now.

    I tried going with all the setups with the thinking that ten four 250 share positions in my strategy were the same, or better, than one 1000 share position.

    I found it not to be profitable for me. I go with my best almost all the time now with a much better success rate. Sometimes I will have a feeler out on a 2d position however.
  9. wrbtrader


    I'm not sure what's bothering you considering I've never met anyone that prefers to use their worst performing setup instead of their best performing setup. :D

    Thus, day traders do use their best setup from amongst the good ones. In fact, its not uncommon for good traders to have different setups for different types of market conditions and/or different types of price actions.

    Markets are forever changing. Your best setup today may be your worst setup next year even if its still profitable. Therefore, always be prepare to switch strategies to minimize drawdowns.

    Also, the fact that you mention that when chop shows're also depending upon your trading experience to tell you to stay away. Thus, as you indirectly noted, your trading experience is arguably just as important as your trade setups...working together in your trading plan.

    Reality is that some traders know when they shouldn't be trading but for some odd reason feel compelled or behave like they're addicted...resulting in opening a trade position in types of price actions they already know they will not perform well in. In contrast, those with good trading experience like you will stay far away from that types of price actions they know isn't suitable for trading...

    That's called good discipline.
  10. Thank you for your response; I appreciate it.

    Since I am older and have traded for over 1/2 a century, how the market works is familiar to me.

    The swan that was thought up recently by someone has always been my greatest money velocity opportunity. To be holding positions to have the opportunity fits in parallel with all other kinds of opportunities.

    It all boiled down to always being on the correct side of the market.

    I have given all the reversals I do specific names as a result of their characterisitics. There is a finite spectrum of possibilities so it was not difficult to complete the list of names.

    Trading for me is just taking profit segment after profit segment. I only use 94% of my capital as a consequence of the price volatility in a given trend volatility (all in a leveraged context).

    I trade on a hold/reversal basis which is very different than the entry/exit style that is common. My orientation is right/left.

    Handle, quite nicely, explained how he has trained his employees to do their jobs. From what I understand they are sidelined right after taking profits and they wait until the briefest of reversals has or has not occurred, then they take positions for the remaining part of a developing trend move.

    I have 7 names for that first part of what is next after taking profits at the end of a trend. Two of these 7 have a couple of varients each. One has one varient.

    After that, when a full trend develops there are 10 pathways that develop one after another and each is mutually exclusive.

    It is like a train going down a mainline and coming to a series of sidings (10). Some of these freight yards have more space for box cars than others. The engineer always knows what to do by reading the signals that his team of track operators are providing for him.

    The path for turning the CW's Balck Swan into a great opportunity comes mostly from learning how the market operates with news, planned and unplanned. The most instructive is the regulator announcements made during RTH. A lot of people suffer from this practice of the regulators. But it does yeild four what CW calls set ups.

    By digesting how to have the opportuity to make money on news announcements, it sets a trader up for learning how to win for black swans.

    I really do not admire people who think up stuff like black swans and then not present the solution as well. My solution was in effect before the black swan got its name.

    So far, it has not been possible to go back and forth with regulators on my having the right to make money and then give it away to those who need money. I felt it was under the umbrella of NFP's but I have to use other's NFP's and they not have to explain what is going on.

    the great divide in making money or doing the CW level of performance is the mathematics that underlies the plan and the strategy. The CW orientation precipitated black swans for the CW oriented traders.

    For me, A black swan is a price move that is going very rapidly from the RTL towards and exapnding the LTL.
    #10     Sep 2, 2012