Kiss

[darktone]

Yes.

LOL! Well im off to spend my night in a different way!


All the best.

 

[BSD]

p62: You and BSD are confusing an academic exercise with real trading. Technically, everything the two of you propose is correct, i.e., mathematically correct. But in real trading, risk should be the first consideration, not reward, and having a high success rate is far more important than having a low one for a variety of reasons, not the least of which is developing and maintaining the self-confidence to trade one's plan.

Being right more often than wrong is not irrelevant; it is critical.

Nope.

I really and absolutely have zero problems with confidence when trading a low hit rate style.

To me it's about one thing, and one thing only:

Maximising profitability with a style that is as scalable as it gets.

And the way to do that is through low hit rate strategies that clean up on big moves.

Brett Steenbarger:

"...As a rule, maximizing batting average/minimizing drawdown comes at the cost of lowering overall system profitability...."

Lets face it, I have full respect for people like Marty Schwartz with their high hit rate strategies, but it's not rocket science, the way he does that is simply through having bigger Stop Losses than Take Profits, and by simply going for tiny moves of a few points at a time.

And it comes at the massive cost that it is not scalable which is why he failed with his hedge fund.

High hit rate doesn't mean one understands markets better which is just snakeoil nonsense anyway, bragging on boards, high hit rate just means your stop losses are bigger than your take profits, and that you're just going after tiny pip / point amounts, high hit rate is just a feel-good factor.

Kenneth Grant, in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:

ACROSS ALL TRADING STYLES, TIME FRAMES, MARKET CONDITIONS AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !


I emailed with him after I read his book, and he guaranteed that he'd be able to provide anyone with a very lucrative job with excellent profit sharing schemes at the hedge funds he's worked at who has a better documented (!) track record than that over a couple of years.

Just doesn't happen, blabbers on boards aside with no track record, and / or who do not trade for a living.

Trader Dante here is one of the very few people on here who has the potential to earn himself a massive fortune and get really, really rich, because he fully understands what it's all about, outstanding risk / reward ratios.

He has a simple, robust system, and he understands the immense importance of really really letting his winners run to maximise profitability to the hilt.

"I will tell you all now: I give A LOT of money back to the market in terms of being in profit and then being taken out for break even.

But I make MUCH MORE than I give back by playing this way because when I have a good entry and the price takes off without looking back, you can find yourself at the beginning of MAJOR moves that boast incredible R:R."
http://www.trade2win.com/boards/first-steps/26947-making-money-trading-28.html#post367227

That's where his success comes from, that's why he made thousands of percent profit in half a year (OK, betting the ranch initially didn't hurt), and that's why he's found a prop firm that trust him with their money which is the next step on his path to success which will definitely come if he keeps up what he's been doing.

Walking the talk, in other words, while others just talk.

 

[dbphoenix]

To me it's about one thing, and one thing only:

Maximising profitability with a style that is as scalable as it gets.

And the way to do that is through low hit rate strategies that clean up on big moves.

However, since the outcome of any given trade is unknowable, it isn't possible to know in advance that there is going to be any "big move" to clean up on. Therefore, the more important consideration is to control risk, and the easiest way to control risk is to nail the entry.

High hit rate doesn't mean one understands markets better which is just snakeoil nonsense anyway, bragging on boards, high hit rate just means your stop losses are bigger than your take profits, and that you're just going after tiny pip / point amounts, high hit rate is just a feel-good factor.

Incorrect. A high "hit rate" means that your entries are immediately profitable or you're out at BE. It has nothing to do with wide stops, nor does it necessitate cutting profits short. Once in a profitable trade, there's no reason to exit at all until one receives a reversal signal.

ACROSS ALL TRADING STYLES, TIME FRAMES, MARKET CONDITIONS AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !


Perhaps true, but not incompatible with anything I've said. The number of BE trades may be quite high.

Trader Dante here is one of the very few people on here who has the potential to earn himself a massive fortune and get really, really rich, because he fully understands what it's all about, outstanding risk / reward ratios.

I'm sure TD does quite well, as I'm sure do you. But so what? There are many ways of making money from the market. But I continue to urge those who ask for my help that they develop a system with a high "hit rate". John Magee felt the same way, but rather than provide a variety of quotes, I'll go with what I've found to be true in my experience.

Hope your day is going well.

 

[new_trader]

[EDIT]

but rather than provide a variety of quotes, I'll go with what I've found to be true in my experience.

Hope your day is going well.

Once again DB, well said and I absolutely agree.

 

[BSD]

DB, don't get me wrong, I'm not saying at all that high hit rate is wrong or anything, I'm just saying that many think it's the holy grail or the only way to net profits and I'm saying that simply isn't the case.

Just clearing that up.

But of course high hit rate can be a good way to trade.

I do totally understand and fully appreciate that the single most important issue is finding a style one is comfortable with, that fits ones personality.

If that's high hit rate like you or Marty Schwartz - absolutely loved his book PIT BULL and style btw -, than that is not just fine, it's the enabling reason why you or he can be net profitable.

If one is deeply uncomfortable with something it won't work.

I do fully see that there is only one path to success, and that is first knowing what one wants, and then finding out what works for oneself to get to where one wants to go.

And if that's making money trading a high hit rate style that's fine.

Hope your day is going well too

 

[dbphoenix]

DB, don't get me wrong, I'm not saying at all that high hit rate is wrong or anything, I'm just saying that many think it's the holy grail or the only way to net profits and I'm saying that simply isn't the case.

Just clearing that up.

But of course high hit rate can be a good way to trade.

A high hit rate in and of itself, though, is meaningless. I'm not at all attracted to scalping, but I'm going to assume that a high hit rate is important to scalping given the low R:R. For any other form of trading, it's just churning.

But a high hit rate combined with a thorough knowledge of and understanding of support and resistance and how to read price/volume action in real time is -- as far as I've seen -- difficult to beat. So I'll stay with what I have.

Db

 

[JTrader]

JTrader,

Trading is the only profession I know where people are encouraged to strive for mediocrity. Taking the hypothetical 7/3 ratio and applying it to the ES contract using theoretical minimums.

The result after 10 trades:
7 losers = (7.00)
3 winners = 9.00
Commission = (1.00) approx
Net Profit = 1.00 x $50 =$50.00

If you could do this consistently you can make a nice living trading 10 contracts, perhaps fewer. But what if I were to suggest that through more study and practice you could actually attain a better win loss ratio? What if I was to suggest that for every 1 hour the average person puts in you put in 3 hours? What if instead of going to the pub on Saturday night to drink with your mates you studied the markets? Would you accept that you could actually attain a ratio of 7 wins and only 3 losers or even better? Not only that, but that your winners were more than 3 times bigger than your losers! I doubt you would think it’s possible. Not only that, the majority will convince you that it is impossible and any effort to try is a dead investment. Few people are willing to go to the very bottom of things. Is it any wonder that success is for the few?

True.
But then i think what wasp, dbp and others have said on this thread and others is that with trading, one is tempted to try and search for perfection (maybe to ease our insecurities about ultimately having no control over what the market will do with our entry). It is possible to waste years like this, searching for perfection/improvements, only to go full circle & conclude that what you x months/years back was in fact fairly close to what you conclude to be the best approach now.

 

[dbphoenix]

True.
But then i think what wasp, dbp and others have said on this thread and others is that with trading, one is tempted to try and search for perfection (maybe to ease our insecurities about ultimately having no control over what the market will do with our entry). It is possible to waste years like this, searching for perfection/improvements, only to go full circle & conclude that what you x months/years back was in fact fairly close to what you conclude to be the best approach now.

I can't speak for wasp, but the search has been not for perfection but for the ability to hear what the market is saying. The process in that quest has been an ongoing development, once I stopped wasting my time with anything that did not contribute to my reaching that goal. Therefore, I'm better able to hear what's being said now that at any time in my trading, and I'll be even better able to hear it next year than now.

Db

 

[BSD]

"Trading is the only profession I know where people are encouraged to strive for mediocrity. Taking the hypothetical 7/3 ratio and applying it to the ES contract using theoretical minimums.

The result after 10 trades:
7 losers = (7.00)
3 winners = 9.00
Commission = (1.00) approx
Net Profit = 1.00 x $50 =$50.00

If you could do this consistently you can make a nice living trading 10 contracts, perhaps fewer. But what if I were to suggest that through more study and practice you could actually attain a better win loss ratio? What if I was to suggest that for every 1 hour the average person puts in you put in 3 hours? What if instead of going to the pub on Saturday night to drink with your mates you studied the markets? Would you accept that you could actually attain a ratio of 7 wins and only 3 losers or even better? Not only that, but that your winners were more than 3 times bigger than your losers! I doubt you would think it’s possible. Not only that, the majority will convince you that it is impossible and any effort to try is a dead investment. Few people are willing to go to the very bottom of things. Is it any wonder that success is for the few?

LOL !

It's exactly total and complete nonsense like what New Trader wrote up there which explains why he's just totally full of completely irrelevant, false and misleading BS, and why he isn't even able to trade for a living for crying out loud (!!!), why he may be all kinds of things but most definitely is NOT net profitable, all while being the resident Admirer-in-Chief of this boards other biggest fool, Socrates.

With Trader Dante it's just the opposite, which is why he IS trading for a living.

 

[dbphoenix]

BSD, that you disagree with me is fine, but please stop with the implications that I don't trade for a living. I've been trading for a living for nineteen years now, and I've been able to do so by following those who were successful traders long before computers and indicators.

If you want to believe it's nonsense, great. I'd rather profit from it than argue about it.

Db

 

[BSD]

DB, I didn't mean you, I mean New trader.

Quote New Trader:
Would you accept that you could actually attain a ratio of 7 wins and only 3 losers or even better? Not only that, but that your winners were more than 3 times bigger than your losers!

70% hit rate, and risk / reward ratio of 1 to 3 ?

My ass.

I will bet you anything in the world that he does NOT have any way to back that up, it's just complete, total and utter BS.

It's downright criminal, in fact.

The guy should be banned for good for posting such false and misleading pipe dreams.

 

[firewalker99]

Nope.

I really and absolutely have zero problems with confidence when trading a low hit rate style.

To me it's about one thing, and one thing only:
Maximising profitability with a style that is as scalable as it gets.

And the way to do that is through low hit rate strategies that clean up on big moves.

Though I admire the fact that you manage to stay confident in the face of adversity when running into a losing streak, I must admit that at first I was convinced that I didn't need a 70-80% win rate in order to be profitable. But as time went past, it came down to one thing really: I wasn't able to stay focused after a couple of losses. For some reason my vision became blurred and I saw things that weren't there.

I've got no doubts that people can make money trading something of 20-30% win rate, but perhaps it requires a certain type personality. One that doesn't mind losing money for a couple of sesssions straight and then getting it back and gaining even more in one day. But when traders first start out they will more often than not cut those profits short once they finally have that profitable trade. This is obviously a personal note, but I suspect a lot of aspiring traders walk down the path of aiming for a low win% system because of what they've read of heard...

 

[firewalker99]

BSD, that you disagree with me is fine, but please stop with the implications that I don't trade for a living. I've been trading for a living for nineteen years now, and I've been able to do so by following those who were successful traders long before computers and indicators.

If you want to believe it's nonsense, great. I'd rather profit from it than argue about it.

Db

So what keeps one going after 19 years of succesful trading, considering the level of activity you exhibit around public forums? I'm guessing it can't be money...

 

[dbphoenix]

DB, I didn't mean you, I mean New trader.

"It's exactly total and complete nonsense like what New Trader wrote up there"

I can't testify to the sense or nonsense of what NT says since I don't read much of it (sorry, NT, but so much of what you say is just second-hand Bertie). But what I've said is not nonsense, whether you agree with it or not.

70% hit rate, and risk / reward ratio of 3 to one ?

My ass.

And, again, I don't do R:R. But a 70% hit rate with such an R:R is not beyond the realm of possibility. If he can do it, great. He's not selling anything, so who cares?

 

[new_trader]

DB, I didn't mean you, I mean New trader.

Quote New Trader:
Would you accept that you could actually attain a ratio of 7 wins and only 3 losers or even better? Not only that, but that your winners were more than 3 times bigger than your losers!

70% hit rate, and risk / reward ratio of 1 to 3 ?

My ass.

I will bet you anything in the world that he does NOT have any way to back that up, it's just complete, total and utter BS.

It's downright criminal, in fact.

The guy should be banned for good for posting such false and misleading pipe dreams.

LOL

 

[dbphoenix]

So what keeps one going after 19 years of succesful trading, considering the level of activity you exhibit around public forums? I'm guessing it can't be money...

Given that you registered three years after I did and have two hundred more posts, your level of activity is even more remarkable . . .

 

[JTrader]

Though I admire the fact that you manage to stay confident in the face of adversity when running into a losing streak, I must admit that at first I was convinced that I didn't need a 70-80% win rate in order to be profitable. But as time went past, it came down to one thing really: I wasn't able to stay focused after a couple of losses. For some reason my vision became blurred and I saw things that weren't there.

I've got no doubts that people can make money trading something of 20-30% win rate, but perhaps it requires a certain type personality. One that doesn't mind losing money for a couple of sesssions straight and then getting it back and gaining even more in one day. But when traders first start out they will more often than not cut those profits short once they finally have that profitable trade. This is obviously a personal note, but I suspect a lot of aspiring traders walk down the path of aiming for a low win% system because of what they've read of heard...

While i don't doubt it is possible to make decent cash with a hit rate of 20-30%, for me less than 40% would become a worry. I actually consider 40-49% quite a high hit rate, if you are trading something that enables you to capture the trend more often than not. 40% plus is a psychological number i am happy with, if the results were to be good.
Lots of "small" losses, and the one big winner that more than makes up for the losses is fine with me. Perhaps though, there's also a need to focus on instruments that trend the most, and trend most easily.
True, you might be assuming/relying on the the one big winner will come that you will hopefully allow you to capture the big mover. And this big mover may not come. However, if your 40% hit rate is based on a fair number of trades, and this is the average hit rate, there will have been periods where the hit rate will have been much higher & when the hit rate will have been lower than 40.
As mentioned some are not comfortable with being "wrong" (low hit rate), and may pull the plug on their approach - just before that big winner!
If over enough trades to make your results significant, you can achieve a higher than 40% hit rate, maybe 60% plus, keep losses small, capture the trends, and achieve favourable R:R results, then great, you are very close to having a holy grail.

But i don't consider having a high hit rate i.e. 60%+ a necessity. Many people have said the same on these boards - i.e. that 40% can be sufficient with the right approach.

 

[new_trader]

And, again, I don't do R:R. But a 70% hit rate with such an R:R is not beyond the realm of possibility. If he can do it, great. He's not selling anything, so who cares?

Thanks DB. It seems the things I say will only be afforded credibility when someone like you backs it up. Perhaps I should change my nickname.

 

[BSD]

And, again, I don't do R:R. But a 70% hit rate with such an R:R is not beyond the realm of possibility. If he can do it, great. He's not selling anything, so who cares?

VS

Kenneth Grant, in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:

ACROSS ALL TRADING STYLES, TIME FRAMES, MARKET CONDITIONS AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !


I emailed with him after I read his book, and he guaranteed that he'd be able to provide anyone with a very lucrative job with excellent profit sharing schemes at the hedge funds he's worked at who has a better documented (!) track record than that over a couple of years.

Just doesn't happen, blabbers on boards aside with no track record, and / or who do not trade for a living.

Why care ?

Because NT's outrageous claim is nothing than bull**** that I absolutely guarantee you he is NOT doing, nor is anyone else doing that.

Tell you what Newtrader, we know you're not even trading for a living.

Prove to us that you are not what I believe you are, a liar and a braggard with no clues about trading, prove your claim with a track record of say two years with no less than a couple hundred trades, and I will get you a top paying job in a hedge fund via the guy who wrote this book.

I guarantee that you will NEVER be able to back it up, that your bragging is nothing than false and misleading BS that has no place on a real traders board !

 

[new_trader]

VS

Kenneth Grant, in "Trading Risk: Enhanced Profitability through Risk Control", depicts his experience as risk manager for some of the best and most successful hedge funds, amongst others Paul Tudor Jones funds and Steve Cohens SAC Capital, that:

ACROSS ALL TRADING STYLES, TIME FRAMES, MARKET CONDITIONS AND TRADERS, ONE RULE HOLDS TRUE:

10% OF ALL TRADES INEVITABLY ACCOUNT FOR 90% OF PROFITS !


Why care ?

Because NT's outrageous claim is nothing than bull**** that I absolutely guarantee you he is NOT doing, nor is anyone else doing that.

Tell you what Newtrader, we know you're not even trading for a living.

Prove to us that you are not what I believe you are, a liar and a braggard with no clues about trading, prove your claim with a track record of say two years with no less than a couple hundred trades, and I will get you a top paying job in a hedge fund via the guy who wrote this book.

I guarantee that you will NEVER be able to back it up, that your bragging is nothing than false and misleading BS that has no place on a real traders board !

BSD,

I really am sorry that you find what I say so unpalatable. There is nothing I can do about it. Perhaps you should put me out of your misery and place me on ignore.