Random Entry

[Splitlink]

interesting debate... I would throw my 2p's worth in by saying even with a random entry you would still need a strategy.. i.e. where the stop loss is ? how much of your account to risk ? where is the door (exit) ?

Thing is, why would you employ a random entry when you can simply draw a line's on a graph along the peaks and trough's ? to form a range.. and enter / exit near each swing.

I have been VERY suprised many times by how accurate this can be.. it seems too easy to make money , but its a really is that easy and it costs you little if your not correct !! ...

so why flip a coin.. ?

It's, still, random, though. Using the peaks and troughs is one of my favourite trading methods but there is no indication of whether the price will bounce or sail right through.

Using a 2:1 risk ratio is all that I use to enter, in the first place. With luck, it will be better than that and, with bad luck, you'll be stopped.

 

[misterboy]

It's, still, random, though. Using the peaks and troughs is one of my favourite trading methods but there is no indication of whether the price will bounce or sail right through.

Using a 2:1 risk ratio is all that I use to enter, in the first place. With luck, it will be better than that and, with bad luck, you'll be stopped.

How many pips do you go for and how many do you risk when trading using trendlines? Thanks

 

[Splitlink]

I don't have any hard and fast rules on that. It depends on what you are trading and the time frame.

The average length of a bar on the TF you like to use is an indication of its volatility. Put a SL closer than the average length and you are increasing the risk of getting it triggered. I don't trust the average length much, either. I am inclined to use the maximum length over the period I'm looking at, apart from spikes, which are difficult to forecast.

If I don't like the amount of risk on that basis, I may reduce the trade size or leave it alone.

Split

 

[0007]

interesting debate... I would throw my 2p's worth in by saying even with a random entry you would still need a strategy.. i.e. where the stop loss is ? how much of your account to risk ? where is the door (exit) ?

Thing is, why would you employ a random entry when you can simply draw a line's on a graph along the peaks and trough's ? to form a range.. and enter / exit near each swing.

I have been VERY suprised many times by how accurate this can be.. it seems too easy to make money , but its a really is that easy and it costs you little if your not correct !! ...

so why flip a coin.. ?

Couple that with a half-decent estimation of the trend (if there is one) and you have the basis of a good system.

 

[normbeef]

take a look at this "random" graph

Couple that with a half-decent estimation of the trend (if there is one) and you have the basis of a good system.

Indeed, and although its certainly not perfect (what is ?)

But I cant tell you I have had many of those... "surely this cant be right" moments using this method... when the price has hit the line I drew exactly !!! and bounced back up into the trend almost to the pip!!!

I use daily charts which would seem to me to want to be much more random than a smaller timeframe because they are potentially affected by more event risk over time..

Thing is.. you would think that the market would iron out obvious ranging trends but I suppose that they might well be the only indicator it is possible to use...

So.. I have attached a graph to show exactly what I mean... a good example to look at is the AstraZeneca (AZN) daily chart... this stock has held a near perfect ranging pattern since the end of 2004 !!! its calling the reversals where the skill is...

and who says the markets are random

 

[Paul71]

Indeed, and although its certainly not perfect (what is ?)

But I cant tell you I have had many of those... "surely this cant be right" moments using this method... when the price has hit the line I drew exactly !!! and bounced back up into the trend almost to the pip!!!

I use daily charts which would seem to me to want to be much more random than a smaller timeframe because they are potentially affected by more event risk over time..

Thing is.. you would think that the market would iron out obvious ranging trends but I suppose that they might well be the only indicator it is possible to use...

So.. I have attached a graph to show exactly what I mean... a good example to look at is the AstraZeneca (AZN) daily chart... this stock has held a near perfect ranging pattern since the end of 2004 !!! its calling the reversals where the skill is...

and who says the markets are random

I still use the diaganol lines, only one though, across the highs on down trends and across the lows on on up trends, it's funny how they work. 99% of the time i'm more interested in a price thats up for buying or selling, that's the real issue (in my view). But the accuracy of the diagonal line still amazes me. I wonder if the first person who ever drew a chart seen this and thought...."f*ckin 'ell....look at this!"

 

[0007]

The trouble is that it's so simple that very few people will believe it. But it works - just as described. Made me a bob or two.

 

[Hotch]

I don't really agree.

Random entry can work. If the market is very volatile, making lots of large moves up and down, chances are you would enter at a point where there is enough movement left to make a profit, and with sound money management that would work.

However, I think people are getting too hung up about percentage wins. What matters is expectation, and the time taken. Percentage win is just part of a larger calculation, and all values can be successful.

 

[normbeef]

I don't really agree.

Random entry can work. If the market is very volatile, making lots of large moves up and down, chances are you would enter at a point where there is enough movement left to make a profit, and with sound money management that would work.

However, I think people are getting too hung up about percentage wins. What matters is expectation, and the time taken. Percentage win is just part of a larger calculation, and all values can be successful.

I think what we are saying is why would you bother to use random entry than go with what can be a very accurate trend ? I have followed trends for years at a time (as AZN above) why would I bother just going in blind when I have the most simple entry mechanism right there in front of me ?

I agree with 007 it might just be too simple for some people.. perhaps they are not happy with limited complexity ?

 

[Splitlink]

Perhaps "random" clicks in more on intraday trading? A trend seems clearer to me on a TF of more than 60 minutes. Of course, I am older---not so keen on short term trading as I used to be.

To be truthful, it's a more peaceful life!

Split

 

[Jaydee]

How many pips do you go for and how many do you risk when trading using trendlines? Thanks

Depends entirely on the volatility and the time period for the trade for me...