bangkoker
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in my experience trying to second guess conditions is a hiding to nothing.
No was very good, erm off to rest and have a think.
in my experience trying to second guess conditions is a hiding to nothing.
No was very good, erm off to rest and have a think.
Yes, that is my thinking at present as a basis, and today's limited range of 40pts played along well with that idea. 40pts is well within the FTSE's usual daily range (and would be a happy daily reward for me personally).
However, other possibilites will certainly arise, as has been suggested -
1) Very wide early range, e.g. 90pts. Surely it's expecting too much that price should break out of there and travel another 20, 30, 40, let alone another 90? And if the stop is set at the further extreme of the early range that could lead to a 90pt loss. I suspect it could be more prudent not to take such a trade at all.
2) Very narrow early range, e.g. 10pts. It still seems reasonable to take the further extreme of the early range as support/resistance and to use it as the basis of a stop. But surely there is the opportunity to set a target much further out, at say 40pts from entry, thereby improving the r:r? On the other hand, the stop is that much closer to entry and more easily hit by volatility in a false move.
Maybe the decision to trade might be based on the ratio of the early range to the ATR? e.g. if more than 0.8, or less than 0.2, ignore the trade. Does this sound rational?
Yes, it does.
Thanks
OK. My focus is on reducing risk, so I'm going to attend to the possibility of a wider range first as that puts the stop further away from entry. Today's Big Ben range was 40pts, the ATR at Friday's close was 71, so we only hit 56% of the ATR. So, adding a new rule - no trade if BB Range = >80% of ATR. This percentage may need tweaking, but thanks guys, one day in and we have a new rule already.
the only way to get serious is to backtest it. excel will do. my contact is away now for a week but when he is back, if you get in touch with me at my name at yahoo.co.uk i will try to get you some ftse futures data (liffe) if you want to automate this at some point you'll have to move to the futures market and it's a good way to find out what slippage and costs you're going to experience. also you can test if confirmation buffer makes a difference or not. in my work in the past it didn't and turned in to something that got chopped and changed all the time. placing an order to buy or sell at the exact top or bottom of range made extra points every time i was in, reduced risk and improved rrr. over all this outweighed the odd occasion where i got in to something and it reversed. that was my experience but i'd encourage you to backtest it and like i say, i can get you some data if you are ok using excel. good luck for today.
Target hit?
Presumably you are in and on way to profit, hope it keeps going as short from 5265