should the stop be greater than the limit ?

[robster970]

Ok, then explain what he is talking about ? He seemed unable to express himself very well.

Go back over 20-30 trades on one security and look at the Maximum Adverse Excursion and Maximum Favourable Excursion on all your trades. You will see a pattern emerge. You can then use this pattern through trade mgmt to become profitable. The pattern reveals an important behavioural attribute of a market and once you think about it for a bit, you will understand why a random entry system can make money because the behavioural attribute is universal for the security you are trading and exists independently of your entry or exit point.

 

[BeginnerJoe]

Go back over 20-30 trades on one security and look at the Maximum Adverse Excursion and Maximum Favourable Excursion on all your trades. You will see a pattern emerge. You can then use this pattern through trade mgmt to become profitable. The pattern reveals an important behavioural attribute of a market and once you think about it for a bit, you will understand why a random entry system can make money because the behavioural attribute is universal for the security you are trading and exists independently of your entry or exit point.

Well I have said earlier in the thread that the market reaction to coin toss entry would be no more favourable than to other entries. So there's no benefit to random entry. If there's no benefit, why use it ?

But I continue to believe better entries are possible. This makes random entry even less interesting. I use a multi-entry approach. Once optimised, it'd beat random entry, or the regular pot-shotting entry any day of the week.

Entry is about attaining a margin of safety. That's an edge in on itself. I certainly would not leave that to a coin toss.

Now here's an interesting question. Given that the market behaviour is modified by an entry, why do the hare and LV use back testing when the static data used is incapable of this dynamic behaviour ?

 

[robster970]

Well I have said earlier in the thread that the market reaction to coin toss entry would be no more favourable than to other entries. So there's no benefit to random entry. If there's no benefit, why use it ?

But I continue to believe better entries are possible. This make random entry even less interesting. I use a multi-entry approach. Once optimised, it'd beat random entry, or the regular pot-shotting entry any day of the week.

Entry is about attaining a margin of safety. That's an edge in on itself. I certainly would not leave that to a coin toss.

Now here's an interesting question. Given that the market behaviour is modified by an entry, why do the hare and LV use back testing when the static data used is incapable of this dynamic behaviour ?

Random entry is only a technique, it is in itself not the answer to profitability. I asked you analyse your trades in a particular way to see a pattern that underpins profitable trading on all timeframes for all securities. However that would require work, thought and a level of intellect which I have good reason to believe is beyond your ken. Good luck for the future. I'm done now.

 

[the hare]

Now here's an interesting question. Given that the market behaviour is modified by an entry, why do the hare and LV use back testing when the static data used is incapable of this dynamic behaviour ?

I don't use back testing, in fact I've explicitly told you several times exactly how I handle this issue

Your last post is rather worrying in several respects. I suggest you take the appropriate steps to verify your beliefs rather than relying on blind faith, and secondly, avoid the optimization route



Just trying to save you from wasting the next 5-10 years looking in the wrong direction

 

[barjon]

A paper profit is as real as a paper loss. Why else would you exit a trade if it runs against you too much given that there's yet no change to your account balance ? I am shocked after 30 years of playing the casino you still have such glaring holes in your thinking.

Of course it is, but it's not cemented in until you choose to finalise the trade. So you can't pat yourself on the back for looking at a healthy profit if you allow it dwindle away to nothing anymore than you can for having a "risk restricted" loss if you let it expand 'til you're carted off to A&E.

I think you've been tugging our chains a bit - hope so anyway

 

[robster970]

I think you've been tugging our chains a bit - hope so anyway

I don't think so Jon - I think he's always just going to be our statement authentificator.

 

[Shakone]

Joe to take a perfect entry where the exit doesn't matter, over any time period, means to hit the exact high and/or low over that time period. Any other entry, will have some drawdown, and therefore will depend on stop size etc, i.e. will depend on exit somewhat. Agreed?

You believe that the market is going to alter based on your entry, therefore even if you could tell where the high and low would be without your entry, as soon as you enter it will no longer be the high or low. So taking your views, you can never pick the exact top or bottom, and therefore, again by your views, you will inevitably need to look at exit. Correct?

 

[wackypete2]

I don't think Joe gets it

Haha.
But wait, maybe you guys don't get it

This thread: Joe check it out, Joe do the backtesting, Joe try it for yourself, Joe you can do the homework, Joe here's a few tips you can work it out from there, Joe think about it, etc etc etc...

Joe: What? Who? Me? Do the work? No, Nada, Niet, Never, Nunca, No way, Ain't happening, etc etc etc...



Sometimes I crack myself up!

Peter

 

[Liquid validity]

Haha.
But wait, maybe you guys don't get it

This thread: Joe check it out, Joe do the backtesting, Joe try it for yourself, Joe you can do the homework, Joe here's a few tips you can work it out from there, Joe think about it, etc etc etc...

Joe: What? Who? Me? Do the work? No, Nada, Niet, Never, Nunca, No way, Ain't happening, etc etc etc...



Sometimes I crack myself up!

Peter

Probably the best and sanest post on this thread

 

[BeginnerJoe]

Random entry is only a technique, it is in itself not the answer to profitability. I asked you analyse your trades in a particular way to see a pattern that underpins profitable trading on all timeframes for all securities. However that would require work, thought and a level of intellect which I have good reason to believe is beyond your ken. Good luck for the future. I'm done now.

I may look into it one day when I run out of things to do. Right now my plate is full with my entry focused system.

I lost count of the times you said you are done. But I don't think you will be done until the threat to your belief system is neutralised. Since I am an unshakable believer in my world view, you and I are likely to have undone business for a very long time to come.

I don't use back testing, in fact I've explicitly told you several times exactly how I handle this issue

Nope, I don't remember a single time you telling me that. But you can tell me here if you like.

Your last post is rather worrying in several respects. I suggest you take the appropriate steps to verify your beliefs rather than relying on blind faith, and secondly, avoid the optimization route

My beliefs are based on my observations. Faith plays no part. If you can't see what I can see, then it's your loss.

All strategies require optimization. This is how general concepts become concrete working strategies.

Just trying to save you from wasting the next 5-10 years looking in the wrong direction

Like Robster, I think you are more worried about your own belief system than trying set me in the right course. I am going where I am going is because my gut is showing me the way.

Of course it is, but it's not cemented in until you choose to finalise the trade. So you can't pat yourself on the back for looking at a healthy profit if you allow it dwindle away to nothing anymore than you can for having a "risk restricted" loss if you let it expand 'til you're carted off to A&E.

I think you've been tugging our chains a bit - hope so anyway

No, not tugging at chains. I genuinely believe what I believe. I regularly let my profits dwindle to nothing to the exasperation of others. I have good reasons to do what I do, because I could see beyond the immediate profit.

My goal in trading is to be able to see well in advance I am not going to lose. Then winning can take care of itself, making exit non-critical.

I don't think so Jon - I think he's always just going to be our statement authentificator.

True, I will remains a statement verifier who will have never managed to verify a single one because people are too busy tossing coins than showing statements. See why I am against coin tossing ?

Joe to take a perfect entry where the exit doesn't matter, over any time period, means to hit the exact high and/or low over that time period. Any other entry, will have some drawdown, and therefore will depend on stop size etc, i.e. will depend on exit somewhat. Agreed?

You believe that the market is going to alter based on your entry, therefore even if you could tell where the high and low would be without your entry, as soon as you enter it will no longer be the high or low. So taking your views, you can never pick the exact top or bottom, and therefore, again by your views, you will inevitably need to look at exit. Correct?

There's no need to be exact. The market is not exact. The market is all about the mean. If you can attain a point above the mean, you would have gained an edge. To accomplish that takes deliberate effort and action. Mindless coin tossing is no use.

Joe: What? Who? Me? Do the work? No, Nada, Niet, Never, Nunca, No way, Ain't happening, etc etc etc...

No need to do the work if others have already done it. But their results are too unreliable for my tastes. So I am looking elsewhere for now.

 

[ZEN archer]

Looks like a simple question, but is it.
Say one has a stop of 2 points on the S&P 500 and a target of 2 points. Nicely balanced you might say. Then we get to the what if.......

what if the stop is 2 points and the taerget 3 or 4 points. Fewer winning trades probably but more points when successful.

what are your thoughts on this tricky question ?

I prefer to take reasonable profits whenever available not paying too much attention to r/r. Once I take profit I calculate it out of curiosity (it makes me feel better if it's a good r/r)

 

[Pat494]

A lot of useful replies. I only expected a brief few and those dismissive. How wrong I was.

:innocent:

 

[dtb2]

Personally the worst trade is to be up, somewhat but not near your target yet and not able to set the stop to B/E.

Trade stalls and becomes a loser. I struggle with that a lot.

 

[lke220]

can anyone help me out with good reading material regarding risk management issues ? Thanks

 

[the hare]

The lulz boat is about to set sail

 

[Shakone]

There's no need to be exact. The market is not exact. The market is all about the mean. If you can attain a point above the mean, you would have gained an edge. To accomplish that takes deliberate effort and action. Mindless coin tossing is no use.

Which mean is that then? Price? Or aggregate of positions? Should be easy for you then if it's as simple as that. What's holding you back, or are you actually pretty content with your trading?

 

[cablemonster]

epic fail

 

[BeginnerJoe]

Which mean is that then? Price? Or aggregate of positions? Should be easy for you then if it's as simple as that. What's holding you back, or are you actually pretty content with your trading?

The mean of the positions should be favourably placed relative to the mean of the price. Who said anything is holding me back ? My trading is under continued development. It resembles real trading in contrast to pot shots people take in their so called 'trading'. This is why the like of the hare couldn't call out trades because he might have 10 pot shots all miss in a row.

 

[malaguti]

The mean of the positions should be favourably placed relative to the mean of the price. Who said anything is holding me back ? My trading is under continued development. It resembles real trading in contrast to pot shots people take in their so called 'trading'. This is why the like of the hare couldn't call out trades because he might have 10 pot shots all miss in a row.

sounds like a challenge there :clap:

 

[the hare]

This is why the like of the hare couldn't call out trades because he might have 10 pot shots all miss in a row.

I think my longest streak of consecutive losses was 14 trades. That resulted in a 12% drawdown in my play account which is traded at 5:1 leverage. If I recall correctly in 2011 I had 4 consecutive months where I either lost, or earned less than the cost of doing business. I still made a return in excess of 100% for the year.

At some point in the future I expect those losses will be exceeded. I wouldn't be surprised to experience a losing year at some point over the next decade.