I will repeat once again: I am a SCALPER. Not in the market maker sense of buying the bid, selling the ask a thousand times a day, rather in the retail trader sense of small profits based on price action momentum (with occasional big runners out of nowhere). Here is a pretty darn clear definition of what I do (I removed the word "Forex" as this was from a Forex site and the concept applies to anything you trade): "Scalping is based on an assumption that most...patterns will maintain the first stage of a movement that will move in the desired direction for a brief time, but where it goes from there is uncertain. Some of the...trends will cease to advance and others will continue. A scalper intends to take as many small profits as possible, not allowing them to evaporate. Such an approach is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades while letting others reverse. Scalping achieves results by increasing the number of winning trades and sacrificing the size of the wins. It's not uncommon for a trader of a longer time frame to achieve positive results by winning only half or even less of his or her trades - it's just that the wins are much bigger than the losses. A successful scalper, however, will have a much higher ratio of winning trades versus losing ones while keeping profits roughly equal to or slightly higher than losses. Practically any trading system, based on particular setups, can be used for the purposes of scalping. In this regard, scalping can be seen as a kind of method of risk management. Basically any trade can be turned into a scalp by taking a profit near the 1:1 risk/reward ratio. This means that the size of profit taken equals the size of a stop dictated by the setup." My average R:R is now greater than 1:1 because I researched and implemented a method of entry that allows for that. I also have rules regarding moving my stop to break even. If I count break even trades as losers, my win rate is actually rather ordinary, but if you remove break even trades, my win rate is pretty high, which you'd expect from a scalper.
Actually, I would expect an even distribution between wins and losses for such a short time frame-- if you add in commissions and fees-- do you break even trading in this manner? surf
10-29-12 04:32 PM <b>Utterly rubbish. You must know the wrong people. Why would a stop loss degrade system performance? </b> This is like dealing with angry toddlers with an agenda. Clearly, you just don't understand. Why not ask the experts linked above? Ones even a famous TA guru who concurs about stops. The ignorance is breathtaking
Don't you now use stops? I don't understand this disconnect. You claim that stops erode a systems performance and yet you use stops now. Can you explain this contradiction? PS Is this going to be one of these things where you were ONLY referring to fixed stops on every trade?
I don't trade automated or fully objective systems. You need to ask the system experts on the links I posted. But it is common knowledge stops degrade performance. What can I say? Are you making up or exageratting your experience? Regarding my apple trade, due to the high stock price, I was indeed a weak hand. Hence the stops.
I've used stops for many years now but each trade's stop price is determined by the PA displayed on the several time frames I use (ie I do not use fixed stops, such as .10 from entry etc). Each trade setup's stop is unique to its circumstance but easy to calculate in realtime. Common knowledge? Meh, that's a false assertion. It does not align with my OWN experiences whatsoever. PS You don't trade a fully objective system?? You said you are ONLY interested in objective systems...hmmm....things keep changing with you....
Are you serious? You post 3 links to 3 different articles where each author test the impact on 1 system, and at least one of them just being "theoretical", and think you can generalize that result to "any" system? Sheesh. All you can say is that it might be true for the 3 different systems that were tested. Come on, you can do better than that. Oh and by the way, what's my agenda?