I was commenting that I agreed with some of Overnight's post which was responding to qlai's post which was responding to straightjacket's post about waiting for trades to go against his original trade thesis coupled with wider stops giving him better results, which sounds to me like random entries. Checking the MFE/MAE should be one of the first things you do when you have a trade concept. You should simply be testing your trade signal over various time periods or volume quantities - a trade is opened, how has price moved after 1 minute, 5 minutes, 50 minutes or after 5k contracts, 15K contracts 50k contracts, etc. If you look over a multitude of periods and the MFE and MAE are always equal your trade trigger sucks and is no better than random. This type of testing is one of the reasons why you'll see people post trades that have them exiting after 'X' bars vs some fixed target or stop.
I guess you'll have to accumulate your trading data over time and extrapolate going forward. You could also try using the volatility index and somehow correlate it to your risk assessment. I'm not sure what you're talking about here. Record some volatility measure for each trade.? Most things said by others will go against what you believe or know to be true. Get used to it. Everyone's different. (People will still scream "You're wrong! That's NOT what you feel!" in this case. LOL) If you like it; I love it. Track every thought and piece of data you have. You'll quickly figure this out yourself ... as to what to really track or not. But do track why you made the trade. Take screenshots of the charts etc. after you're done trading for the day. Record video of your screen and speak your thoughts (recording audio as well) as you trade. Decrease the money (contracts) used per trade to adjust your risk if you think you need to. This way, your strategy can remain the same, if you want to keep it. Base it upon your estimated potential widest stop ... based upon all the data you will amass.
Thanks for the clarification. Sounds promising, but complicated. I only took a cursory look at the explanation I found and didn't really understand anything more than the concept. Maybe I would better understand it if I made a serious effort to, which I would probably do if I were struggling with my trading, but since I am totally satisfied with the results I'm getting, I'm opting to forego addressing my ignorance and will leave the topic for those much smarter than I. (I carried out a number of very thorough analyses on how price moves over various time periods, but always from the angle of a rather "simple minded" guy who never got past high school calculus. Also, I see neither posts from Overnight nor from qlai, so I guess they must both be on my ignore list.)
Years ago I use to recommend scalping and day trading, but it is no cakewalk any more, but it is not cause of the HFTs or automation. It is just way too many patterns one has to discover and memorize, takes years to get consistent. I did it opposite, I got good at stocks long term then commodities and was bored of long term, so added into scalping. Oh Boy, this takes so fricking long to get the hang of it. Scalping/day trading has the greatest amount of risk for me than long term since I hedge. But someone does a fat finger in ES and Bamm out thousands, and fees are way too high compared to what can be had if you take many trades, even renting seats is no free lunch. Yea, I think only 1% of those who do intraday makes a decent and 0.03% make the most. New trader likes he can have so little money to be able to open brokerage, but you be a victim of the big dogs most of the time, what am I saying, I want all to come in and test the waters, need more bait. Have a life, do long term trading and learn how to sell options around your positions. Less fees, explore country you live.
Thank you for this. I actually feel that I have an edge based on my bias for the day (up/down). But I am weak on establishing entry/exit and stop loss. I am just observing the volume patterns and how it correlates to the magnitude of up/down movement. But I am doing this by eye, not yet measuring it. Would you have any suggestions on how to go about testing and synthesizing signals that can be mechanically defined? (Based on my call for the day.) As an aside, I’m careful to create 2/3 scenarios for my daily call/bias if there is mid-session economic news scheduled. I also try to have a contingency in case of surprise news.
Good lord. Calgon, take me away. Hindsight does not help pave the way to the future. Leave that to the Klingons.