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 Do you always make spurious inane comments? It was only a question !....tsk some people !...

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Old Oct 9, 2008, 10:25am   #41
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Originally Posted by new_trader View Post
Do you always make spurious inane comments?
It was only a question !....tsk some people !
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Old Oct 9, 2008, 10:30am   #42
 
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It was only a question !....tsk some people !
So was mine

Anyway, time to leave this thread, it is now infected.
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Old Oct 9, 2008, 10:34am   #43
 
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Have you set a date yet to go live ?
yes, probably once the latest order of pizza is prepared and delivered.

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Old Oct 9, 2008, 11:09am   #44
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Just caught this gem of a thread !

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Originally Posted by new_trader View Post
I disagree. Current market conditions have been the ultimate acid test of the wisdom and advice of Socrates. He is, no doubt, the Grand Master of trading.
The only thing he was was a first class charlatan and posturer spouting esoteric nonsense whose sole purpose was to dazzle total newbies with simple and gullible souls into believing that he was a proficient trader.

Real traders understand that trading is nothing more than a simple probability game.

But then he couldn't have known that as he couldn't have traded his way out of a paper bag if his life depended on that as he proved when he went live for one single time only and promptly lost.

Bull****ters bull**** around with misleading complexity that has no other purpose than to impress, real traders understand the inherent simplicity of markets, that there is no secret conductor conducting all market participants in a manner that could be predicted with a crystal ball,no, instead of wasting their time on understanding what cannot be understood as all markets are is just the sum of their participants differently motivated actions, so they just make like a casino, forget about hit rates as a priority, walk the walk, and make lots of money.

Click the image to open in full size.

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Originally Posted by Joey25 View Post
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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Originally Posted by Grey1 View Post
Your comments are non technical and irrelevant. Understanding volatility is crucial in risk assessment and hence directly correlated to pos sizing,,,
Personal un justified views such as ATR works when it does and does not work when it does not is not a type of defence that one should put forward in acceptance or denial of theoretical concepts specially when it comes to volatility..

If you feel pos sizing and volatility are not a measure of risk analysis please refer me to some theoretical papers so I can update my knowledge,


Grey1

Spot on guys !


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Originally Posted by Joey25 View Post
Unless I'm missing something, all you've done is deduce that a stop of 1.25 will suffice for winners of 1pt or less. Of course volatility seems irrelevant for this type of "micro-scalping".

http://www.trade2win.com/boards/gene...ad-week-2.html

All credit to you for posting those results, new_trader, and I'm sure in a prop environment you would do very well, but don't make it out to be something it isn't.

Joey
If it's even true - and NT has never gone live as far as I am aware -, then that kind of trading is COMPLETELY irrelevant, as it is NOT scalable, you CANNOT compound it.

But turning the leastest into the mostest is why we are doing this, otherwise you could make far safer and better money becoming a consultant or sthg.

High hit rate is just for those who have a need to be right, but it is NOT the way to make the most money.

Most net losers in markets are right more often than they are wrong.

Should give some people sthg to think about !

Does one see or does one not see ?

LOL !
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Old Oct 9, 2008, 11:20am   #45
 
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Most net losers in markets are right more often than they are wrong.

Should give some people sthg to think about !

Does one see or does one not see ?

LOL !
Exactly.

The results from my journal, although statistically small, illustrate the point. 10 winners, 3 losers and I lost almost everything.

Let's put it down as a live experiment to test the validity of the "spanish stop". Markets do not always come back no matter how far away you put your stop and if you make money doing this, it is almost 100% down to luck. It cannot be continued for any lengthy period of time.

I have, in my own trading, actually noted an INVERSE RELATIONSHIP between win:loss ratio and account growth. I know this sounds insane but it is true for me - the more winning trades I have, the less I end up with ultimately.
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Old Oct 9, 2008, 2:18pm   #46
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Question with the truth

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Originally Posted by new_trader View Post
So was mine

Anyway, time to leave this thread, it is now infected.


Infected with the truth or just infected


Andy
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Old Oct 9, 2008, 4:50pm   #47
 
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Infected with the truth or just infected


Andy
just infected!
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Old Oct 9, 2008, 8:49pm   #48
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No, stops are a function of time.

Sorry mate, got to disagree. Stops are a function of price, it's that simple. Prices are up for buying and selling, and although volatility is big at the mo, the same prices are running in the market, up for auction. So you are either with the market or you are not, you can only buy off sellers, and you can only sell buyers, anything else is against the grain.

No offence, Joey, and not intended as bravado face slapping.

Good trading, mate.
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Old Oct 9, 2008, 8:53pm   #49
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Sorry mate, got to disagree. Stops are a function of price, it's that simple. Prices are up for buying and selling, and although volatility is big at the mo, the same prices are running in the market, up for auction. So you are either with the market or you are not, you can only buy off sellers, and you can only sell buyers, anything else is against the grain.

No offence, Joey, and not intended as bravado face slapping.

Good trading, mate.
I agree with you Paul, good post.
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Old Oct 11, 2008, 2:46pm   #50
 
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Originally Posted by Joey25 View Post
Unless I'm missing something, all you've done is deduce that a stop of 1.25 will suffice for winners of 1pt or less. Of course volatility seems irrelevant for this type of "micro-scalping".
Joey
Having tight stops has nothing do with scalping, but everything with understanding the market's behaviour and having the patience to wait until the probabilities are highest. I don't know anything about new_trader's strategy, other that he uses a 1.25 ES apparently, but that says nothing about the target.

Using a 2 point stop on the ES yesterday, had no effect on my exit (which was +30 points, but only 7 minutes later). I consider myself only a mediocre trader. For example, I've seen many of the more experienced traders use 0.50 ES stops with 50 point targets. Yes, also in the last week or month.

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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 have argued many times with you said in the past, but I'm not afraid to admit that the above is absolutely correct. That doesn't change the fact that it'll probably fall on deaf ear's because it's always easier to shoot the messenger, than attack the message.

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Originally Posted by new_trader View Post
I also didn't say volatility has nothing to do with my trading. I am saying it shouldn't have anything to do with anyone’s 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?
I fear your point will get lost here. Those who are waiting for a bar to close on their 5 or 15 minute chart, should not complain that they can't place their stops close enough. A chart may show discrete bars or candles but price flows continuously.

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If you can only do this using wide stops, then you should endeavour to improve your timing. If you don’t want to or don’t feel the need to, then don’t. But don’t say it’s function of volatility because it is not.
Exactly. But most people rather spent time reading complex mathematical theoretic models about risk & money management, Sharpe ratio, R:R, etc, etc. than study the market until their eyes bleed.

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Originally Posted by Paul71 View Post
Sorry mate, got to disagree. Stops are a function of price, it's that simple. Prices are up for buying and selling, and although volatility is big at the mo, the same prices are running in the market, up for auction.
Good trading, mate.


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Originally Posted by Jaydee View Post
What I get is that you are talking about a particular type of trading where the market moves in a favourable direction as soon as you enter. In such a situation, you can have a very tight stop - I get that.
If you're in a trade for one hour and the market hasn't moved much, shouldn't you ask yourself whether or not the market has given a clear signal? You should always aim to enter a trade when there is a very high chance that price will move in the favourable direction sooner rather than later.

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However, I can't see how you can say no trader should even consider volatility. With increased volatility, the margin for error becomes much larger no matter how good at entries you are. Therefore, you risk being stopped out all the time and not making anything. It's not unusual for a market to tip the balance one way and then whipsaw at the next moment - the DAX springs to mind.
If you're caught in whipsaw, then it means you're timing is off. The only thing that is affected by the current volatility, is the margin requirements your broker demands.

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I'm glad your method works for you and I'm not putting it down but I think you are wrong to say ALL traders should ignore volatility and that by including it a trader has a weaker technique than yourself or isn't addressing the important idea of timing. Your style of trading seems to be all about getting as many winners as possible and tiny risk - that's fine, but there are some styles which don't require such precision and still do very well.
Minimizing risk should be the number 1 priority on anyone's list. Unfortunately, most people only think about the reward, which - unlike risk - is something you don't have complete control over. Is it necessary to have 1 point stops in order to make a profit? Obviously not. But then should it come as a surprise why many people are losing money in this volatility?

Quote:
Originally Posted by trader_dante View Post
Let's put it down as a live experiment to test the validity of the "spanish stop". Markets do not always come back no matter how far away you put your stop and if you make money doing this, it is almost 100% down to luck. It cannot be continued for any lengthy period of time.
Luck (like talent) is overrated...

Quote:
Originally Posted by trader_dante View Post
I have, in my own trading, actually noted an INVERSE RELATIONSHIP between win:loss ratio and account growth. I know this sounds insane but it is true for me - the more winning trades I have, the less I end up with ultimately.
Well I'm surprised to hear this coming from you... I thought your trading approach had high win%, but anyhow... There are only two explanations for what you are describing: you're either using too wide stops (most likely) or you're cutting your profits short.

Quote:
Originally Posted by timsk View Post
9A. Vary the size of the position (and the placing of your stop) based on the volatility of the instrument being traded. Using ATR is as good a means as any for evaluating volatility and appropriate position size, IMO.
ATR is fine as far as it goes. And I'm not ashamed to admit I used it for a long time though, before realizing there is no reason to have 10 point stops just because the market can move 10 points in your chosen timeframe!

Despite that almost nobody will agree, new_trader is right, stops are a function of proficiency, and nothing else. Try a tick chart.

Last edited by firewalker99; Oct 11, 2008 at 3:00pm.
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