The strategy has negative skew. You’ve been able to make it work for you. Maybe @ironchef can make it good for him. Strategies where one has to be more right than wrong appeal to those that have an intolerance to uncertainty. Anyone who’s been in the game for any duration learns to accept this uncertainty and become comfortable with taking losses provided their strategy has a positive expectancy. If this works out for him, he will be like you and be exceptions to the rule.
I would argue can be negatively skewed IF a trader allows large losses. We can control our losses in most cases except maybe not in VLE. I go for small profits and may use wide initial SLs but they are there mostly for algos that shove the market around. More like catastrophic scenarios. That doesn't mean that is where my SL stays. If I see the market behave in such a way that I determine I am on the wrong side I just exit before my initial SL is hit.
Many things on paper never work out in the real world. The market is uncertain. The only thing that is certain is when there is a profit and to take it. Small or large. As long as it covers commission and render profit after commissions. And a scalper must control losses so he never suffers a big loss. But because the market is skewed itself then for scalper that is good. It will render more profitable trades with small profits than bigger, but fewer swings, with more profit. And because of that FOT combined with high win rate and controlling losses makes scalping highly profitable if one can develop the skills. As concern black swan events they can wipe out any strategy left negatively skewed, right positively skewed or non skewed. In my thinking a scalper like myself cannot lose by taking profits even small profits as long as the profit covers commission and renders a little more. By grabbing a clear and present profit $$ are added to the account. And a move continues after the exit I can always enter again. Over and over as long as the move continues. Once I learned that I can enter in multiple times and exit multiple times even on the same bar the lightbulb flickered on. Market probing allows this to happen. So instead of waiting and holding for a 15 or 20 point move (which may come 1 to 3 times in a session of the ES) I can make that much in less time, make my brokers happy, wife happy, and account grow more quickly. For years I never saw nor understood the following simple observation that money can be made on most any bar. If trading 5m bars I have at least 81 chances of making money in the ES and actually many even more times than 81 because on larger momentum bars MULTIPLE entries and exits can be made. When I became cognizant of this and began to see the market is continuously probing and this probing create scalping opportunities. When it registered with my brain much more can be made by short-term jumping in and out grabbing profits as the market meanders, twists, and turn as it is trending than a buy and hold for a bigger profit in a trend then a floodlight saturated my brain. J.M. Hurst opened my eyes to this fact. Now trade 1m or 2m charts and guess what? The potential for many more trades has just increased exponentially.
First of all, I would like to thank @volpri for giving me the privilege to test his method. Very rarely did someone on ET posted an approach that is so transparent and testable. Whether I can make it work is secondary and not important to me or my bank account. A few questions and comments @Sprout, if you don't mind: 1. Can you explain what you meant by negative skew? 2. I had another significant loss day Friday, not using SL and averaging down wasn't working on Friday. 3. If I were to continue, I have to make adjustments: being able to shorts would have cured Friday, putting a SL would have cured Friday, but most important, stopped averaging down would have cured 2-7-25 and Friday. 4. Why did I not make those adjustments already? I need to give the method time to play out, to collect enough live test statistics for analysis. 5. Without averaging down, average daily profit would be half, ~0.15% with no drawdowns. However, there are still unknown-unknown I have not encountered. From my options experience I know tail events are very unpredictable and no two are alike. 6. Maybe that is good enough for some? For me, with a daily profitability of 0.15%, I should stay with trading options. I appreciate constructive comments from folks like you. Thank you again.