Suggestions for mastering speculation

This is a discussion on Suggestions for mastering speculation within the General Trading Chat forums, part of the Reception category; Originally Posted by new_trader Let me explain it like this: A sniper tells you that they only pull the trigger ...

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Old Oct 8, 2008, 8:01pm   #21
 
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Originally Posted by new_trader View Post
Let me explain it like this:

A sniper tells you that they only pull the trigger if they are certain that the bullet they are firing is going to kill their target.

Do you need to ask, what about if you are firing from a different distance?

Do you need to ask, what about in different weather conditions?

Do you need to ask, what if the target is moving?

The sniper repeats, they only pull the trigger if they are certain the bullet they are firing is going to kill their target.

In the same way, I am saying that stops are a function of proficiency.
Only proficiency?

So you are telling me that you would have a 5 tick stop on an ES trade that you planned on running over a period of days rather than intraday?
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Old Oct 8, 2008, 8:23pm   #22
 
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Only proficiency?

So you are telling me that you would have a 5 tick stop on an ES trade that you planned on running over a period of days rather than intraday?
Get the 5 tick stop out of your head and you might start to think a little clearer. I am saying that proficiency is the result of study and practice. What is so confusing? What can't you grasp?

Are you suggesting that the amount of guessing you do is proportional to the term of the trade? Are you suggesting skill is only relevnt on short term trades and luck should be relied upon for longer term trades?

I don't know how to make my point any clearer.
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Old Oct 8, 2008, 8:27pm   #23
 
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Get the 5 tick stop out of your head and you might start to think a little clearer. I am saying that proficiency is the result of study and practice. What is so confusing? What can't you grasp?

Are you suggesting that the amount of guessing you do is proportional to the term of the trade? Are you suggesting skill is only relevnt on short term trades and luck should be relied upon for longer term trades?

I don't know how to make my point any clearer.
Are you ever going to post an answer to a question I post?
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Old Oct 8, 2008, 8:51pm   #24
Joined Mar 2005
Trading Vol

Here's a trade I've just done which illustrates that you can have wide stops based on volatility, and provided you use the vol to your advantage in the exits, you'll do far better than being ultra-precise and scalping for a few ticks.

The trade was a pivot point fade, the pivot point being more fadeable the more time has passed throught the day.

The stop is based on resistance, but should come in similar to 15-min ATR

Sell 3 at 1027.00
Stops at 1033.25
Exit at 1018.25

Profit = 3 x 8.75 = +26.25 points

Even though the stop was 6.25 away from the entry point, the move only got as high as 1027.25. What I'm saying is that the price should reverse somewhere between 1027.00 and 1033.25 - where exactly I don't care.

The point is the position of the stop is not the same as the risk of the trade

Then throughout the life of the trade the P/L deteriorated at times by 4pts, and the end result was inefficient in that it got as low as 1014.00. But who cares when the end result is + 9 handles?

Joey
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Last edited by Joey25; Oct 8, 2008 at 8:54pm. Reason: Thanks for BSD for pointing me in this direction!!!
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Old Oct 8, 2008, 10:07pm   #25
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Jaydee,

For f*ck's sake, new_trader is actually trying to tell you something. Don't be so stubborn. He's trying to help you and you're throwing it in his face with your pointless questions, you're asking the wrong questions and should just be listening . . .
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Old Oct 8, 2008, 11:16pm   #26
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Originally Posted by Joey25 View Post
Financial markets are often characterized by non-constant variance (heteroscedasticity), and tend also to be backward-looking in nature (autoregressive).

In the case of the indices, forward volatility is a function both of previous volatility and trend - i.e if the trend (or drift) in the time series is up, volatility tends to fall.

eg of how historic volatility can be useful...re sp cash over the last 3 days we've had lower lows, red candles and the range (ie the volatility element) has contracted. this has occurred 17 times since 1998, in all trades we have bounced in the next 24 hrs (ie before 2115 tomorrow)....without giving everything away, im now long biased, expecting to hit 992-97 min tomorrow . dyor, fwiw, this is data mined, im also hedge with deep otm puts, so risk reduced in case of meltdown
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Old Oct 9, 2008, 12:01am   #27
 
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Originally Posted by temptrader View Post
Jaydee,

For f*ck's sake, new_trader is actually trying to tell you something. Don't be so stubborn. He's trying to help you and you're throwing it in his face with your pointless questions, you're asking the wrong questions and should just be listening . . .
Oh come on, I wasn't throwing anything in his face or looking for help. I simply wanted to get his opinion on how he would base his stop in the long term and if a stop is purely down to ability. I was looking for something a little more tangible and to the point than what he wrote, that's all.

He disagreed with the volatility idea Timsk put forward and then said volatility had nothing to do with his trading - he uses a 1.25 point stop regardless. I was curious how he thought and have been asking questions (sorry you didn't like them) which seemed very reasonable for me to get an understanding of how he approached things. I wanted to know if his 1.25 point stop would be set for a longer term trade for example.

All he was saying was effectively 'I have a stop based on my experience' which tells me nothing. My stops are based on my experience too, but I can tell you almost exactly how they work for me and I can tell you how I'll place them on trades across multiple time periods. Based on this, my line of questioning doesn't seem all that unreasonable really.

Sorry it riled you so much that you felt you had to get involved.
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Old Oct 9, 2008, 12:10am   #28
 
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I don't think either of you have an argument with one another, you're just talking at cross purposes.

Have a w...
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Old Oct 9, 2008, 12:30am   #29
 
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Originally Posted by Jaydee View Post
Oh come on, I wasn't throwing anything in his face or looking for help. I simply wanted to get his opinion on how he would base his stop in the long term and if a stop is purely down to ability. I was looking for something a little more tangible and to the point than what he wrote, that's all.

He disagreed with the volatility idea Timsk put forward and then said volatility had nothing to do with his trading - he uses a 1.25 point stop regardless. I was curious how he thought and have been asking questions (sorry you didn't like them) which seemed very reasonable for me to get an understanding of how he approached things. I wanted to know if his 1.25 point stop would be set for a longer term trade for example.

All he was saying was effectively 'I have a stop based on my experience' which tells me nothing. My stops are based on my experience too, but I can tell you almost exactly how they work for me and I can tell you how I'll place them on trades across multiple time periods. Based on this, my line of questioning doesn't seem all that unreasonable really.

Sorry it riled you so much that you felt you had to get involved.
No, you still don't get it. I said the 'stop' is a function of proficiency, not time, resistance, support, pivot points etc...it is not a mechanical issue, at all. You persist in getting some sort of concrete, tangible answer which doesn't exist. What will it take to make you understand what is meant by proficiency? I use a 1.25 point stop now. I used to use a much larger stop. Nothing has changed other than my ability to judge my entry point better. What more do you want?

I also didn't say volatility has nothing to do with my trading. I am saying it shouldn't have anything to do with anyoneís trading. If you are proficient you will be efficient. If you are efficient you trade with close stops because your trades move immediately in your favour after entry and almost never put your stop at risk. Is this making it clearer? If you can only do this using wide stops, then you should endeavour to improve your timing. If you donít want to or donít feel the need to, then donít. But donít say itís function of volatility because it is not.

The art of speculation is recognising what has occurred and as a consequence, what will occur. It is knowing what to expect and then acting accordingly with coolness and precision. It is not taking guesses and adjusting stop size to account for 'volatility'. Like I said, cause and effect, action and reaction. Either you understand or you don't.
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Old Oct 9, 2008, 12:31am   #30
 
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Originally Posted by arabianights View Post
I don't think either of you have an argument with one another, you're just talking at cross purposes.

Have a w...

Has it helped your trading?
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