51%

This is a discussion on 51% within the General Trading Chat forums, part of the Reception category; "Originally Posted by SOCRATES Neither. I have to approach all of this from a very different angle to what is ...

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Old Apr 10, 2011, 2:49pm   #76
 
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Re: 51%

"Originally Posted by SOCRATES
Neither.

I have to approach all of this from a very different angle to what is the norm, either for efficient or inefficient traders.

I justly expect to get it right every time, and I very nearly do. Because of this I am aware that from time to time I may make an error, or, suddenly conditions change just as the buttons have been pressed. Therefore, statistically speaking, the greater the number I get right in a row, the more alert I make myself become to the possibility that the next one, or the next one after that, etc., could be the one to break the run.

This causes me to become more and more guarded and more and more "super alert" to such a possibility. Therefore I always use a ridiculously tight stop. I expect any pozzie to get at the money immediately, and in the money very quickly. If this does not happen quickly and efficiently, then I concede that what I did was right, but conditions suddenly have changed, or that conditions are about to change, or that conditions synchronously changed while the buttons were being pressed, or that I misread the market in gereral terms or the specific conditions existing at the time, or walked into an ambush, because that is also possible.

As a consequence of very long experience spanning several decades in this profession, I have to force myself not to be complacent. I have to be very aware of unexpected risks, just like everybody else.But, therefore, for the opposite reason to many others, I have to be be particularly guarded against lulling myself into a sense of false security, on the basis that a long successful run is going to continue as such. Therefore I have to prepare myself against these dangers, the greatest being dereliction of action (response) as a consequence of viewing an unexpected outcome as a contradiction, as a personal affront, if you like. Then for me rigid adherence to a tight stop policy is crucial in order not only not to damage performance and have to do unnecessary work to recover what is avoidable but also to assist in the emotional disconnection necessary.

You can see that I approach this differently to nearly everybody else, and the reasons for my approach being so."


This was one of the many things I agreed on wholeheartedly with Albert.
Perfectly put.
Richard
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Old May 21, 2011, 5:58pm   #77
Joined May 2011
Re: 51%

Quote:
Originally Posted by donaldduke View Post
You wont get a win rate of 75%+ while using fixed 1:1 stops, i mean real ones you actually hold with your broker.

And so you will have to take some large losses every now and then.
I don't agree that this follows. Why would one have to take large losses? If we day trade in a liquid market, no overnight positions, and hard stops held at the exchange, then the possibility of a larger than expected loss is very slim.

As for not getting a 75% win rate - what does this need to do with made up risk reward ratios and using a hard stop? Are you saying that it is impossible to get three trades correct out of 4 using 100 tick stops and targets? 50 ticks? 10 ticks?

If you are wrong more than a quarter of the time, what does this say about your skill level and business plan? Yes, one can make money, but the purpose of being an independent trader is to make a fortune from the markets as quickly as your skill level allows. Surely a higher strike rate allows one to employ more capital on each trade, compounding the account much faster.
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