@vanman72001, Just want to say I appreciate your posts. Time is something I have not thought of in day trading even though in my option trades, time is the most important element since option contracts do expire. For me it is an interesting concept worth exploring. Thank you.
You are welcome, and I appreciate all the feedback. I've completed about 50 scalp trades so far using the 3-minute timer system, tweaking the system a little with the suggestions everyone is making. I'm already seeing some pleasantly surprising results, and some of them have to do with something other than the stock in play during the timer. I just need to run a couple hundred more trades through to see if the data actually supports what I think I am seeing, then I will give you guys a detailed report of the results. It has opened up a whole lot of ideas that are interesting, and so far at least one negative aspect. And if I like the results after 200 trades or so, I will continue the timer for another 6 months and really get some more accurate data after another 1000 trades or more.
In mathematics, the 'random walk' is a graph where the direction of the next point in relation to the current one is decided at random. If the steps between points are small enough, a fractal is generated, known as the Brownian process.
The Wiener process is the one used in quant finance, based on Brownian motion. This is an example of how its "self-similar" just like a fractal. -Wikipedia
It's still way too early to give accurate results, but after 114 trades with the 3-minute timer system, I can tell you this: Old system: Accuracy = 58% Profit/Loss ratio (PnL) = 1.42 to 1 Annualized return potential = 103974% (absolutely and ridiculously unsustainable) Very high FOMO and high stress leading to wild intra-day swings. Though I had 19 green days in a row with a profit every single day with the old system, it was only a matter of time before I had a nasty red day that would wipe out all my gains (or worse) in a single day. 3-minute Timer system: Accuracy = 60% Profit/Loss ratio (PnL) = 2.09 to 1 Annualized return potential = 187% (sustainable and realistic) Zero FOMO (or very close to it). Very low stress. Intra-day swings have been very minor. Even with only 8 profitable green days in a row of trading under the new 3-minute Timer system, I feel so relaxed it is unbelievable. It is night and day compared to before. The biggest advantages of the 3-minute Timer system so far: 1. Almost zero FOMO, very low stress, and nearly zero emotion. (Trading a profitable system as if you were a machine, an Algorithm. This is the Holy Grail of trading.) 2. Increased PnL is huge. 3. Being in a losing trade for a maximum of 3 minutes keeps losses very small and eliminates the desire to average down. 4. I can still average up on a good trade and ride it longer than 3 minutes if it is going well. 5. Daily profit target is easily met and sustainable. I'm currently averaging 1.57 x my daily target. 6. Trading only one stock during the 3 minutes allows me to hyper-focus on the candle formations, time & sales, $Tick, and Level 2. This allows me to cut losses extremely quickly or before they even happen by taking a tiny gain instead. It also allows more confidence in letting winners run. This improves accuracy and PnL. 7. Reduction in daily share volume of 85%. Smaller position sizes greatly reduce risk. I will keep updating the stats on the new 3-minute timer system so we can all see how it progresses or fails with more and more trade data. This whole scalping experiment has led to some very interesting results and some new self-knowledge about my own trading, regardless of how it ends. Very worthwhile. I've been day trading for over 25 years, all the way back to when the Nasdaq stocks still traded in fractions rather than decimals (which was awesome by the way!). But it is never too late to experiment and try new things. Happy trading!
i read somewhere that linda raschke holds for 7 bars. if target has not met within 7 bars, she closed it regardless.
Very interesting and thank you for sharing your finding. By setting hard time limit, it removes anxiety, second guessing and FOMO. Could setting hard stop and exit criteria prior to entry accomplishes the same?
"Could setting hard stop and exit criteria prior to entry accomplishes the same?" Possibly, at least for some people. For me, when I created hard stops, sometimes a long tail down on a candle would trip the stop loss and then the candle would pop right back up and turn green before heading higher and higher. This almost always triggered FOMO in me. For this reason, I mostly use mental stops for now. Also, when I have a hard stop in place, I always have to cancel it when I start taking partial profits when the stock begins to run which slows down my execution speed, by a couple of seconds, which can hurt profits on a stock that is screaming up fast before getting rejected at a resistance level. And also, when I cancel the stop loss, I don't have time to put a new one in place (or forget to) when I am taking profits on a rising stock. The 3 minute timer serves as a reminder to set a stop loss at break-even on the remaining shares when I am in the green. In addition, when I purchase a stock that is waffling and refusing to pop up after I buy it, but is down by only a few cents, the 3 minute timer will go off and let me know there isn't enough momentum behind this move, and I just sell instantly for a very tiny loss. That is a huge advantage. With the trades I took today, I had a couple of them that waffled and wouldn't budge right after I took them, the timer went off, and I took the tiny losses and instantly began looking for better set-ups. As a result, I hit my daily target in 20 minutes, at 9:50 am EST. Today's metrics were amazing with an Accuracy of 73% and Profit/Loss (PnL) ratio of 12.43 to 1. I had zero fomo this morning and felt in complete control even when taking the losses. That is a huge change in my trading mindset and experience. Not every day will have those kind of stats, but a PnL of at least 2 to 1 and an accuracy of over 60% looks very doable with this system.
Those are great results! Question: Have you tried double or triple bracket order? With the Schwab TOS platform, I can do that.