Technically Fundamental
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Everyonerich>Spanish
Does anyone have wider stops than take profit?
- Thread starter meanreversion
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Technically Fundamental
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on the FF grapevine he was doing well... making a few hundred quid a day then he blasted it all. No idea how the job is going. I only spoke to him for a few weeks on here. Had no idea he was only 19 either.
shadowninja
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No need to sweat. At 19, he's legal.
GammaJammer
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My god - how old did you think he was based on the posts?
Technically Fundamental
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I just thought he was a t*t
meanreversion
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I currently target 40 pct winners, with win twice the loss. This gives an expectancy of 0.2. Then 50 trades a month (average), risk 0.5 pct per trade, that's (in theory) +5 pct a month. I think a ratio of under 1:1 on win/loss significantly increases a) number of trades required and b) risk of ruin. Just my theory.
Technically Fundamental
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You're missing the point. We are trying to gauge R:R against Probability of profit. We're saying would you not take a trade you felt was certain if your stop had to be wider than your target.
meanreversion
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I originally started the thread.. the point is most people target 3:1 but what about 1:3 with very high pct of success... I think I'm going to pass on that for the moment but it's certainly one to bear in mind.
Technically Fundamental
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whoops.
After giving it some thought I wouldnt take a trade unless it was >1:1 AND had high prob of success. In my exp bending, twisting or even re-evaluating the core principles of your rules leads to breaking and breaking leads to losses.
i target 9 points profit trading e mini s&p. initial stop is 20 points. but i exit as soon as believe trend has changed and i'm on the wrong side. i look for price action combined with change in macd to decide when trend has changed.
working this way average loser is 4 to 5 points. but i find i need a 15 to 20 point initial stop to avoid getting stopped out by price moves which are not confirmed by macd.
working this way average loser is 4 to 5 points. but i find i need a 15 to 20 point initial stop to avoid getting stopped out by price moves which are not confirmed by macd.
arabianights
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The clue is in your user name, ironically.
If the market is mean reverting, then tighter targets than stops is a good idea.
If it's trending, then tighter stops and big targets are better.
If the market is mean reverting, then tighter targets than stops is a good idea.
If it's trending, then tighter stops and big targets are better.
arabianights
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His current msn username, is (in part), and I quote, "****ING STUPID TAX CODE TAKING 30% OF MY SALARY!!!
" - make of that what you willGammaJammer
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Tells me he's not hit top whack tax yet
No one Knows
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Assuming you have a positive expectation entry system and a consistent exit strategy whatever risk/reward ratio you wish to employ should be positive expectation. Some make more money than others, some have more winners and make less money.
Going for the home runs, 4R+ winners will give a lower percentage winner but more overall profit, aiming for 1R's will give higher percentage winner but lower overall profit. ( I have observed in my testing, just my opinion in my particular system and circumstances)
If you can live with the 40% or less win rate of these very profitable systems then thats the way to go, more money in your back pocket,(although harder mentally to trade and larger drawdowns). Id rather have a slightly less profitable system with an accuracy above 60%, smoother equity curve and less mentally stressfull.
regards
mark
meanreversion
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The thing I'm trying to work out is this.. one can invent a system which is profitable in the past, but might not be in the future. Similarly, a system which WAS unprofitable may become profitable. In other words, any random set of rules may at some time be right and at others wrong.
If 90 pct of traders lose money, what is it that they CONSISTENTLY do which is wrong? (let's assume commission charges and bid/ask are not the main reason for losing money)
If one can identify what causes so many people to lose money, surely all you then need to do is avoid the same mistakes to ensure consistent profitability.
(I think I am in danger of over-analyzing at times, but it's a thought provoking discussion).
If 90 pct of traders lose money, what is it that they CONSISTENTLY do which is wrong? (let's assume commission charges and bid/ask are not the main reason for losing money)
If one can identify what causes so many people to lose money, surely all you then need to do is avoid the same mistakes to ensure consistent profitability.
(I think I am in danger of over-analyzing at times, but it's a thought provoking discussion).
Would you mind giving more information? I'd liek to understand the reasoning behind this.
meanreversion
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This one is fairly intuitive I think. If spot is rangey, then leave wide stops and regularly take profit. If spot is trending, then stop out quickly but once you get on trend, look to run it as long as possible. As always, the question is - how do I know what the trend is. There is another thread floating around about trends.
arabianights
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