How To Think Correctly

[new_trader]

No. Replay is literally replay, replaying the day second by second so that one can see the bar or line or indicator form in real time (anyone who uses indicators knows how they can change in real time in ways that aren't shown scrolling through a hindsight chart). One can also run the day in multiples of real time (2x, 5x, 10x, etc). In this way, one can develop and test a strategy in a weekend rather than in weeks or months.

Benefiting from the work of others is also a type of shortcut. Magee, Douglas, and Wyckoff provided me with significant "shortcuts".

Db

Db, maybe I didn't make my post clear enough. I don't scroll a historical chart, I import the data and display it using an Excel Chart. It would be a simple matter of entering the indicator formulas and they would update as they are calculated, like in real time. If you still think there is a difference can you please tell me which package you use to replay tick data? Thanks.

P.S: I have made a few live trades in the way I did during my version of "replay" and I experienced no difference. It has been beneficial far beyond my expectation.

 

[dbphoenix]

Db, maybe I didn't make my post clear enough. I don't scroll a historical chart, I import the data and display it using an Excel Chart. It would be a simple matter of entering the indicator formulas and they would update as they are calculated, like in real time. If you still think there is a difference can you please tell me which package you use to replay tick data? Thanks.

P.S: I have made a few live trades in the way I did during my version of "replay" and I experienced no difference. It has been beneficial far beyond my expectation.

We may be in off-topic territory here. However, if you're displaying a bar, you're not replaying. If you're watching, for example, a 5m bar take 5 minutes to form -- up down up down up down -- then you're likely replaying it.

As far as I know, only Sierra Charts and Ensign provide replay. But it will likely become more widespread. (SC, by the way, is far cheaper.)

Db

 

[new_trader]

We may be in off-topic territory here. However, if you're displaying a bar, you're not replaying. If you're watching, for example, a 5m bar take 5 minutes to form -- up down up down up down -- then you're likely replaying it.

As far as I know, only Sierra Charts and Ensign provide replay. But it will likely become more widespread. (SC, by the way, is far cheaper.)

Db

Ok, I am as close to replay as I need. I use 1 min bars because that it is how I import my data. I could just as easily go down to tick resolution but for my trading style it is not necessary (as I see it). Also, Excel is the cheapest of them all. I didn't realise that very few packages can do this. Maybe I could make more money being a programmer...

Back to topic!

 

[CYOF]

And this is where you continue to veer off track. Yes, find out how to profit from both the long and short sides by "discovering", or investigating, or testing, the various options. However, none of this has anything to do with "learning about yourself". Yourself is irrelevant. As is "expectancy".

"Thinking" about what "will" happen is a distraction from the most important issue of what is happening right in front of you. This can be determined only by watching price move (and charts form, if one is using charts), not by devoting one's day to posting.

No offense.

Db

No offense taken at all Db.

You are 100% correct when you talk about posting when trading live - it should not to be done, in my opinion, ever. So, at the moment I am not trading.

I want to calrify what Expectancy means to me - as each may have thier own opinion.

Firstly, your Expectancy will be of no use to you if you have not identified a strategy that gives you some winning trades - let it be 60/40, 50/50, 30/70, or whatever. Your sample set - number of trades taken, must have winners and losers.

Secondly, for each trade you must have defined your initial $risk% of available capital.

Thirdly, you must identify, for each trade, the number of shares, or contracts, that will equate to your initial $risk%.

Fourthly, you must record all the details for each trade taken - time, long / short, entry, initial stop, exit/s and P/L.

The main point to note here is that if you have not already identified your strategy that gives you a win / loss sample set, in other words ,if all of your trades are losers, then you really should not be trading live anyway.

A lot of what is been spoken about, testing of systems based on TA charts, comes prior to this exercise. What strategy, or style of trading, one decides to adopt is entirely a personal decision.

The reason for evaluating the results of your strategy is for improvement.

Now, they way I look at it, is that from the onset, it may be wise to understand Expectancy and what values it can give to a trader. If for instance, you start live trading, as I have just done for my attempts at the YM, and they are all losers, which mine are, then knowing key things like how many times did I stick to my stop - or did I even have my stop indentified! - can only help in developing a winning strategy.

No more - no less, and in my mind this is common sense.

So, Expectancy for ME, is not irrelevant.

In fact, for ME, it is the very opposite.

Regards,

 

[CYOF]

Ok, I am as close to replay as I need. I use 1 min bars because that it is how I import my data. I could just as easily go down to tick resolution but for my trading style it is not necessary (as I see it). Also, Excel is the cheapest of them all. I didn't realise that very few packages can do this. Maybe I could make more money being a programmer...

Back to topic!

Just to note - as I am the one who started the thread, I think? - off topic posts do not matter.

Obviously, if the topic is considered to warrant detailed discussion, then it would be more fitting to move it to the correct section.

I have done this recently for a discussion on Expectancy, so if anyone wants to continue discussing that topic then it can be done in the dedicated thread.

I will check if the moderator has copied over the posts yet.

Edit: Done as follows

http://www.trade2win.com/boards/showthread.php?p=294496#post294496

 

[dbphoenix]

No offense taken at all Db.

You are 100% correct when you talk about posting when trading live - it should not to be done, in my opinion, ever. So, at the moment I am not trading.

I want to calrify what Expectancy means to me - as each may have thier own opinion.

Firstly, your Expectancy will be of no use to you if you have not identified a strategy that gives you some winning trades - let it be 60/40, 50/50, 30/70, or whatever. Your sample set - number of trades taken, must have winners and losers.

Secondly, for each trade you must have defined your initial $risk% of available capital.

Thirdly, you must identify, for each trade, the number of shares, or contracts, that will equate to your initial $risk%.

Fourthly, you must record all the details for each trade taken - time, long / short, entry, initial stop, exit/s and P/L.

The main point to note here is that if you have not already identified your strategy that gives you a win / loss sample set, in other words ,if all of your trades are losers, then you really should not be trading live anyway.

A lot of what is been spoken about, testing of systems based on TA charts, comes prior to this exercise. What strategy, or style of trading, one decides to adopt is entirely a personal decision.

The reason for evaluating the results of your strategy is for improvement.

Now, they way I look at it, is that from the onset, it may be wise to understand Expectancy and what values it can give to a trader. If for instance, you start live trading, as I have just done for my attempts at the YM, and they are all losers, which mine are, then knowing key things like how many times did I stick to my stop - or did I even have my stop indentified! - can only help in developing a winning strategy.

No more - no less, and in my mind this is common sense.

So, Expectancy for ME, is not irrelevant.

In fact, for ME, it is the very opposite.

Regards,

Your definition of "expectancy" is so broad that relevance really doesn't apply.

In any case, one could argue that if one has trouble sticking to his stop, or doesn't even remember whether he identified a stop or not, then he has no business trading live.

Trading what seems like a good idea is not a strategy, much less a consistently profitable strategy. Doing it live with real money is irresponsible. If you're losing in the YM, knowing your expectancy -- however you define it -- is less likely to be of real help than knowing the probability that any given entry will result in a profit or a loss. One can do that, eventually, in real time, by trading real money, and hope that he finds some sort of pattern before his money runs out. Or he can thoroughly test his strategy before putting one thin dime at risk. This particular choice seems like a no-brainer, but apparently it is not. Maybe beginning traders just have way too much money.

Db

 

[new_trader]

Your definition of "expectancy" is so broad that relevance really doesn't apply.

In any case, one could argue that if one has trouble sticking to his stop, or doesn't even remember whether he identified a stop or not, then he has no business trading live.

Trading what seems like a good idea is not a strategy, much less a consistently profitable strategy. Doing it live with real money is irresponsible. If you're losing in the YM, knowing your expectancy -- however you define it -- is less likely to be of real help than knowing the probability that any given entry will result in a profit or a loss. One can do that, eventually, in real time, by trading real money, and hope that he finds some sort of pattern before his money runs out. Or he can thoroughly test his strategy before putting one thin dime at risk. This particular choice seems like a no-brainer, but apparently it is not. Maybe beginning traders just have way too much money.

Db

I must agree. CYOF, I was concerned when I read in another thread that you were ready to go live after "a few more days" of checking your strategy. I thought that either I was slow to learn or that you had a "replay" package and you were testing your strategy for another 3 or 4 days faster than real time.

I have years worth of historical data that I trade in simulated mode. It has taken a few weeks but so far I have made over 200 paper trades in simulated mode which is about 15 months worth. I didn't go live until I had made at least 100 paper trades this way. I plan to go through all my data (over 20 years worth) and trade live at the same time. I have noticed no difference in my performance between live trading and simulated trading, other than the cost

 

[CYOF]

Your definition of "expectancy" is so broad that relevance really doesn't apply.

In any case, one could argue that if one has trouble sticking to his stop, or doesn't even remember whether he identified a stop or not, then he has no business trading live.

Trading what seems like a good idea is not a strategy, much less a consistently profitable strategy. Doing it live with real money is irresponsible. If you're losing in the YM, knowing your expectancy -- however you define it -- is less likely to be of real help than knowing the probability that any given entry will result in a profit or a loss. One can do that, eventually, in real time, by trading real money, and hope that he finds some sort of pattern before his money runs out. Or he can thoroughly test his strategy before putting one thin dime at risk. This particular choice seems like a no-brainer, but apparently it is not. Maybe beginning traders just have way too much money.

Db

It will become more clear once the sheet is posted for discussion - words as always, can never explain what a picture can.

Yes, trading live without a strategy is irresponsible, but how many do it!

Most I would say. I daytraded stocks fulltime for the best part of 1 year - a lot of that was papertrading and trading 100 share lots, day in and day out, until I eventually got to the stage where I had 4 - 5 winners each day out of about 8-10 trades.

I then went on to daytrade the E-mini, for various reasons I will not go in to now - but the main one was the $25K daytrading rule.

This is where the big debate starts - does strategy testing, based on historical data, really have any value, as we all agree that the markets can do anything at any time, or is one better off to trade live, with very small risk initially, to identify a strategy that will have least a 50/50 win /loss ratio, and then use testing of your existing strategy with various position sizing techniques in order to improve your bottom line results.

IMHO, it is not as simple as buying and selling based on TA signals, whatever they may be.

In order to question, one must have some details in relation to what they are questioning.

From a strategy point of view, what constitutes effective testing. If we look at Grey1, who appears to have a very successful strategy for daytrading stocks using automated TA analysis, was this strategy developed by backtesting, or real time testing, and then learning how to tweak all the individual "engines" so that he can allow for the various movements in the market, which can be different from day to day.

One way to know how effective Grey1's strategy really is, is to just ask him what his Expectancy figure is. If he says it is 2.4, for example, then for every $1 that he will risk ,he will make, on average, $2.40.

If he then decides to risk $1,500 every day, he will then, on average (the number of trades will be determined by the market signals) make $3,600 per day.

Am I still alone on this, or does anyone see how valuable this information is.

Once you know the Expectancy, you can then simulate various position sizing techniques based on your actual results - not hypothetical results, and this is a big difference.

Now, the truth, as I always like to tell the truth, is that I have not done this yet. I did start to do it when I was daytrading stocks, but I dropped it when I had to take up trading the E-mini.

I plan to start doing it now - using a long term trading strategy (as in several hours) called One Time Framing, which I have yet to prove can give me a win/loss sample set to work with.

Am I prepared to loose some money doing this - yes of course I am. But I consider that money as well spent training - not wasted like my last attempts where I was trading without a plan - I admit that I was fluting around - but it was something that I had to get out of my system - and that is now over and it is time to move on.

By the way - I would consider this, for ME, in relation to trading, the correct way to be thinking.

Regards,

 

[CYOF]

I must agree. CYOF, I was concerned when I read in another thread that you were ready to go live after "a few more days" of checking your strategy. I thought that either I was slow to learn or that you had a "replay" package and you were testing your strategy for another 3 or 4 days faster than real time.

I have years worth of historical data that I trade in simulated mode. It has taken a few weeks but so far I have made over 200 paper trades in simulated mode which is about 15 months worth. I didn't go live until I had made at least 100 paper trades this way. I plan to go through all my data (over 20 years worth) and trade live at the same time. I have noticed no difference in my performance between live trading and simulated trading, other than the cost

NT,

This is exactly the point that I am trying to make.

If were both on the same wavelength in relation to Expectancy, then I would need to only ask you one simple question to evaluate how well you are doing.

Q1: What is your System Expectancy figure.

If you come back and tell me it is 5, then I may be flying over to meet you tomorrow.

What that tells me, is that for every $1 that you risk, you will on average, make $5 profit.

Now before I book the ticket, I may ask you a few more questions:

Q2: What is you sample size - how many trades
Q3: What is your timeframe -days, weeks, months, years

If you say 200 trades over 12 months, then I may say I will visit you next year.

But, if you say 200 trades in one week, then I will be on that plane as fast as my legs can carry me.

Trades = 200
R = $100 (risk per trade)
E = 5 (expectancy)

Average Weekly P/L = 200 x 100 x 5 = $100,000

Handy figures to know - are they not?

 

[dbphoenix]

It will become more clear once the sheet is posted for discussion - words as always, can never explain what a picture can.

Yes, trading live without a strategy is irresponsible, but how many do it!

Most I would say. I daytraded stocks fulltime for the best part of 1 year - a lot of that was papertrading and trading 100 share lots, day in and day out, until I eventually got to the stage where I had 4 - 5 winners each day out of about 8-10 trades.

I then went on to daytrade the E-mini, for various reasons I will not go in to now - but the main one was the $25K daytrading rule.

This is where the big debate starts - does strategy testing, based on historical data, really have any value, as we all agree that the markets can do anything at any time, or is one better off to trade live, with very small risk initially, to identify a strategy that will have least a 50/50 win /loss ratio, and then use testing of your existing strategy with various position sizing techniques in order to improve your bottom line results.

IMHO, it is not as simple as buying and selling based on TA signals, whatever they may be.

In order to question, one must have some details in relation to what they are questioning.

From a strategy point of view, what constitutes effective testing. If we look at Grey1, who appears to have a very successful strategy for daytrading stocks using automated TA analysis, was this strategy developed by backtesting, or real time testing, and then learning how to tweak all the individual "engines" so that he can allow for the various movements in the market, which can be different from day to day.

One way to know how effective Grey1's strategy really is, is to just ask him what his Expectancy figure is. If he says it is 2.4, for example, then for every $1 that he will risk ,he will make, on average, $2.40.

If he then decides to risk $1,500 every day, he will then, on average (the number of trades will be determined by the market signals) make $3,600 per day.

Am I still alone on this, or does anyone see how valuable this information is.

Once you know the Expectancy, you can then simulate various position sizing techniques based on your actual results - not hypothetical results, and this is a big difference.

Now, the truth, as I always like to tell the truth, is that I have not done this yet. I did start to do it when I was daytrading stocks, but I dropped it when I had to take up trading the E-mini.

I plan to start doing it now - using a long term trading strategy (as in several hours) called One Time Framing, which I have yet to prove can give me a win/loss sample set to work with.

Am I prepared to loose some money doing this - yes of course I am. But I consider that money as well spent training - not wasted like my last attempts where I was trading without a plan - I admit that I was fluting around - but it was something that I had to get out of my system - and that is now over and it is time to move on.

By the way - I would consider this, for ME, in relation to trading, the correct way to be thinking.

Regards,

And if this is, for you, to be the correct way to be thinking, great, as long as you're trading your own money and no one else's. However, adopting "expectancy" solely because some other trader who happens to be successful uses expectancy of some sort is not necessarily adequate justification for the course of action you've described. And to insist on the one hand that you have an open mind while stating that you have no faith in backtesting and that what you call "hypothetical testing" is worth "piddly p**s" suggests a certain inconsistency that may explain why you're searching for the "correct" way to think and why you have trouble understanding Douglas.

You say you have a plan, and, in a broad sense, you do. But you don't have a consistently profitable trading strategy. The course you have plotted for yourself is not much different from those which most of the people posting in the journals forum are following: try this, try that, all in real time, all with real money, see what happens. This is not the course plotted by someone seeking to become a consistently profitable trader, much less a professional one; it's the course plotted by someone who craves the action and cannot wait to get to it. Your "plan" may as well consist of wearing mismatched socks during the trading day.

What Grey1 does and what Grey1 accomplishes is completely irrelevant unless he tells you exactly what he does and when he does it and how he does it and you follow all of that to the letter, exactly, what and when and how. You can then expect to achieve exactly the same result that he does. In the real world, however, this isn't going to work for you.

So many beginners base their approaches on what they've read and what of that sounds good, e.g., you can be a profitable trader with only a 50% win:lose ratio, or even 30%. And, theoretically, yes, this is true. But in terms of real trading in the real world, it is crap. But the trader who needs the action overlooks this and drives ahead, regardless.

Db

 

[CYOF]

If anyone want to discuss Expectancy further, then we can use this thread.

I have copied over the last post.

http://www.trade2win.com/boards/showthread.php?p=294522#post294522

Regards,

 

[dbphoenix]

If anyone want to discuss Expectancy further, then we can use this thread.

I have copied over the last post.

http://www.trade2win.com/boards/showthread.php?p=294522#post294522

Regards,

You may also want to copy over the posts which prompted your replies in the first place.

Db

 

[new_trader]

NT,

This is exactly the point that I am trying to make.

If were both on the same wavelength in relation to Expectancy, then I would need to only ask you one simple question to evaluate how well you are doing.

Q1: What is your System Expectancy figure.

If you come back and tell me it is 5, then I may be flying over to meet you tomorrow.

What that tells me, is that for every $1 that you risk, you will on average, make $5 profit.

Now before I book the ticket, I may ask you a few more questions:

Q2: What is you sample size - how many trades
Q3: What is your timeframe -days, weeks, months, years

If you say 200 trades over 12 months, then I may say I will visit you next year.

But, if you say 200 trades in one week, then I will be on that plane as fast as my legs can carry me.

Trades = 200
R = $100 (risk per trade)
E = 5 (expectancy)

Average Weekly P/L = 200 x 100 x 5 = $100,000

Handy figures to know - are they not?

Maybe I am looking at trading TOO simplistically. I have an entry criteria and an exit criteria. I trade those criteria. If month after month I am making money (with some expected drawdowns) that is ALL I care about. The point is, the more I trade the more I am beginning to recognise what a profitable trade looks like and conversely, what a failure looks like. My exit's improve and so does my profit. This process become more and more refined the more I trade. During my simulated trading I have altered my criteria and if I notice an improvement, I do not retest everything. I continue trading until the performance degrades. I then look at ways of improving it again using the experience I have acquired. I can clearly see how my trading has improved during the course of this simulated trading process. I have kept a journal throughout the entire process. I have done everything as if they were real trades. I was never reckless and I took time to go over everything, just as I would in real life. I left nothing to chance. But this takes time, perseverance and endless hours at the computer. I spend up to 10 hours/ day simulated trading on my days off. The live charts now present nothing new to me.... nothing!

 

[dbphoenix]

Maybe I am looking at trading TOO simplistically. I have an entry criteria and an exit criteria. I trade those criteria. If month after month I am making money (with some expected drawdowns) that is ALL I care about. The point is, the more I trade the more I am beginning to recognise what a profitable trade looks like and conversely, what a failure looks like. My exit's improve and so does my profit. This process become more and more refined the more I trade. During my simulated trading I have altered my criteria and if I notice an improvement, I do not retest everything. I continue trading until the performance degrades. I then look at ways of improving it again using the experience I have acquired. I can clearly see how my trading has improved during the course of this simulated trading process. I have kept a journal throughout the entire process. I have done everything as if they were real trades. I was never reckless and I took time to go over everything, just as I would in real life. I left nothing to chance. But this takes time, perseverance and endless hours at the computer. I spend up to 10 hours/ day simulated trading on my days off. The live charts now present nothing new to me.... nothing!

Yep, that's pretty much it. Time, effort, result. Like most everything else.

Db

 

[CYOF]

And if this is, for you, to be the correct way to be thinking, great, as long as you're trading your own money and no one else's. However, adopting "expectancy" solely because some other trader who happens to be successful uses expectancy of some sort is not necessarily adequate justification for the course of action you've described. And to insist on the one hand that you have an open mind while stating that you have no faith in backtesting and that what you call "hypothetical testing" is worth "piddly p**s" suggests a certain inconsistency that may explain why you're searching for the "correct" way to think and why you have trouble understanding Douglas.

You say you have a plan, and, in a broad sense, you do. But you don't have a consistently profitable trading strategy. The course you have plotted for yourself is not much different from those which most of the people posting in the journals forum are following: try this, try that, all in real time, all with real money, see what happens. This is not the course plotted by someone seeking to become a consistently profitable trader, much less a professional one; it's the course plotted by someone who craves the action and cannot wait to get to it. Your "plan" may as well consist of wearing mismatched socks during the trading day.

What Grey1 does and what Grey1 accomplishes is completely irrelevant unless he tells you exactly what he does and when he does it and how he does it and you follow all of that to the letter, exactly, what and when and how. You can then expect to achieve exactly the same result that he does. In the real world, however, this isn't going to work for you.

So many beginners base their approaches on what they've read and what of that sounds good, e.g., you can be a profitable trader with only a 50% win:lose ratio, or even 30%. And, theoretically, yes, this is true. But in terms of real trading in the real world, it is crap. But the trader who needs the action overlooks this and drives ahead, regardless.

Db

I do not agree - of course - but I will tell you why.

I have spent a good deal of time trading live - to be exact 3 months papertrading and 6 months fulltime. During that time, and following reflection on what I done, my main conclusion was the majority of what I tried to learn was all crap.

It was only in the latter stages of my training - last 3 months - that I began to see results - and all were based on my own work and ideas, not on what I had tried to learn from someone else.

Without talking too much about ME, I fully understand why one needs a plan. I would not have been able to trade stocks successfully - even though the profits wre small due to cash availability - I was able to prove to myself that I had a strategy that worked.

Now the crap bit - what I discovered, for me, was that most TA signals were of now real value, in that one minute they worked, and the next they did not. So they were banished from my screens - apart from one little Slow Stochs, that was used on 1 min candle to remind me that the lows/ highs are losing momentum.

What it boiled down to was, have I got the b*ll* to take on the risk in order to get the gains. I eventually did it, and just fired em off when I saw the signal, and got out if I was wrong. It was not long until I got my average 50/50, some days 80/20m 60/40, 40/60, etc, and that was it. I was now a trader - but I forgot to mention that I had spent all of my money during that year on living expenses.

So, now, where am I. As the saying goes, once bitten, twice shy.

i will never walk away from good money again, hence I am still working on contract , but when the time comes that the contract work is slowing up, I will return to my daytrading (which is all set to go) right away.

In the meantime, I plan to explore some new avenues in trading, which I am giving some insight into here.

So, as I said before, one needs to read between the lines to see what a person really writes.

And for what it is worth at this stage, maybe not much to some, I am reading that Socrates, and a few others, really know what they are doing.

Will they tell us their Expectancy figure, well, the only way to find out is to ask!

By the way, this is not an ego trip, been there and done that, I take this very serious. I told you my history as you rightly say, some traders are influenced by what they read. I do not want people thinking that I have no experience in the markets, when in fact, I have a good deal of experience for one particular type of trading - namely daytrading Nasdaq Tech stocks.

Oh, just because my experiences with learning from someone else were bad, does in no way mean that it will be the same for someone else.

One handy way to know if the person, or persons, with whom you are going to converse with will really be of any great assistance to you, id to ask them that one simple question.

Q: What is your System Expectancy

By now, the value of same should be apparent.

If the answer is not forthcoming, then I would see little red lights flashing in my head. This one question reveals all - no fancy statements for lat monh, fancy charts and "indicators", no, just one simple answer please.

And like our politicians do, only in reverse - keep repeating the question until it is answered

Regards,

 

[dbphoenix]

I do not agree - of course - but I will tell you why.

[and so on]

That you found little or no value in paper-trading and/or testing does not mean that there is little or no value in them. Most beginners don't know how to do either.

In any case, expectancy has clearly become your grail, and you seem quite zealous in pursuing it. Perhaps everything will work out as you expect (no pun intended).

Db

 

[CYOF]

Maybe I am looking at trading TOO simplistically. I have an entry criteria and an exit criteria. I trade those criteria. If month after month I am making money (with some expected drawdowns) that is ALL I care about. The point is, the more I trade the more I am beginning to recognise what a profitable trade looks like and conversely, what a failure looks like. My exit's improve and so does my profit. This process become more and more refined the more I trade. During my simulated trading I have altered my criteria and if I notice an improvement, I do not retest everything. I continue trading until the performance degrades. I then look at ways of improving it again using the experience I have acquired. I can clearly see how my trading has improved during the course of this simulated trading process. I have kept a journal throughout the entire process. I have done everything as if they were real trades. I was never reckless and I took time to go over everything, just as I would in real life. I left nothing to chance. But this takes time, perseverance and endless hours at the computer. I spend up to 10 hours/ day simulated trading on my days off. The live charts now present nothing new to me.... nothing!

Again, to be honest, I am speaking from my experiences.

I am not trying to tell anyone how, or what, they should do.

I am just sharing my viewpoint, and putting up some supporting information, that I think is easy enough to follow.

if one gets value from this information, that is fine.

If one want to dismiss it completely, that is also fine.

Based on the sample figures I have put up, I think that no one can argue how valuable this one simple figure can be.

To re-state, If I tell you my expectancy figure is 1.3, then what I am saying is that for every $1 that I risk I will, on average, make $1.30.

This is why daytrading can be so lucrative - if one has an Expectancy of 1.3, and can do 20 trades per day with a risk of $100 per trade, then 1.3x20x100 = $2,600

What ever way works best for you is the right thing to do, but all I am saying is that there are other ways to evaluate results, and to increase profits, which is our main focus point, then Expectancy and Position Sizing (which I am not even going to mention any more here!) can greatly assist.

 

[henry766]

Do you trade pairs dbphoenix? it's an interesting area ( in my view).

 

[new_trader]

I do not agree - of course - but I will tell you why.

I have spent a good deal of time trading live - to be exact 3 months papertrading and 6 months fulltime. During that time, and following reflection on what I done, my main conclusion was the majority of what I tried to learn was all crap.

It was only in the latter stages of my training - last 3 months - that I began to see results - and all were based on my own work and ideas, not on what I had tried to learn from someone else.

Without talking too much about ME, I fully understand why one needs a plan. I would not have been able to trade stocks successfully - even though the profits wre small due to cash availability - I was able to prove to myself that I had a strategy that worked.

Now the crap bit - what I discovered, for me, was that most TA signals were of now real value, in that one minute they worked, and the next they did not. So they were banished from my screens - apart from one little Slow Stochs, that was used on 1 min candle to remind me that the lows/ highs are losing momentum.

What it boiled down to was, have I got the b*ll* to take on the risk in order to get the gains. I eventually did it, and just fired em off when I saw the signal, and got out if I was wrong. It was not long until I got my average 50/50, some days 80/20m 60/40, 40/60, etc, and that was it. I was now a trader - but I forgot to mention that I had spent all of my money during that year on living expenses.

So, now, where am I. As the saying goes, once bitten, twice shy.

i will never walk away from good money again, hence I am still working on contract , but when the time comes that the contract work is slowing up, I will return to my daytrading (which is all set to go) right away.

In the meantime, I plan to explore some new avenues in trading, which I am giving some insight into here.

So, as I said before, one needs to read between the lines to see what a person really writes.

And for what it is worth at this stage, maybe not much to some, I am reading that Socrates, and a few others, really know what they are doing.

Will they tell us their Expectancy figure, well, the only way to find out is to ask!

By the way, this is not an ego trip, been there and done that, I take this very serious. I told you my history as you rightly say, some traders are influenced by what they read. I do not want people thinking that I have no experience in the markets, when in fact, I have a good deal of experience for one particular type of trading - namely daytrading Nasdaq Tech stocks.

Oh, just because my experiences with learning from someone else were bad, does in no way mean that it will be the same for someone else.

One handy way to know if the person, or persons, with whom you are going to converse with will really be of any great assistance to you, id to ask them that one simple question.

Q: What is your System Expectancy

By now, the value of same should be apparent.

If the answer is not forthcoming, then I would see little red lights flashing in my head. This one question reveals all - no fancy statements for lat monh, fancy charts and "indicators", no, just one simple answer please.

And like our politicians do, only in reverse - keep repeating the question until it is answered

Regards,

In the early days I started trading a system that had a long term average net profit of around 0.5 points per trade. The system generated around 15 trades per month so I was expecting to make 0.5 x15x50 = $US375/month per ES Contract if I followed the system RELIGIOUSLY. Not bad, trade 10 contracts and I could make a decent living. But this also meant I had to ignore the fact that the more I traded, the more I began to recognise which trades were likely fail and which were likely to succeed. I was right more often than not, but my experience was being held hostage to a system with expectancy. When I tested the system with more historical data I was horrified to discover that there was a period between equity peaks of over 500 trades. This meant it took over 2 years trading this system everyday...everyday...everyday...just to get back to where I had last been on the equity curve. Needless to say, I don't trade that system anymore. If you still think "Expectancy" is everything, good luck to you.

 

[SOCRATES]

Expectancy (proficient expectancy) is directly proportionate to Ability.

All else is guesswork.