Firewalker's Journey: A path of discovery in search for enlightenment

This is a discussion on Firewalker's Journey: A path of discovery in search for enlightenment within the Trading Journals forums, part of the Reception category; Originally Posted by firewalker99 Gaining 5 points, with risking 1 point only would seem reasonable... We haven't talked much about ...

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Old Aug 18, 2006, 3:43pm   #226
 
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Quote:
Originally Posted by firewalker99
Gaining 5 points, with risking 1 point only would seem reasonable... We haven't talked much about setting targets or goals so I have no real frame of reference and it's only an assumption, I'm open for suggestions though.
The chart will tell you what your target should be. For the time being, choose whatever target you like.
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Old Aug 18, 2006, 3:52pm   #227
 
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Quote:
Originally Posted by dbphoenix
The chart will tell you what your target should be. For the time being, choose whatever target you like.
Well if I cannot use ATR, I would say 3 times my stop, so 3 points.
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Old Aug 18, 2006, 3:58pm   #228
 
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Originally Posted by firewalker99
Well if I cannot use ATR, I would say 3 times my stop, so 3 points.
So go through your trades again with a 3pt target and determine which are winners and by how much and which are losers and by how much.
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Old Aug 18, 2006, 4:12pm   #229
 
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Originally Posted by dbphoenix
So go through your trades again with a 3pt target and determine which are winners and by how much and which are losers and by how much.
Winners:
(4) -> +3 points
(2) -> +3 points

Losers:
(1) -> -1 point
(3) -> -1 point
(5) -> -1 point
(6) -> -1 point

Net result = 2 points
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Old Aug 18, 2006, 4:18pm   #230
 
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Originally Posted by firewalker99
Winners:
(4) -> +3 points
(2) -> +3 points

Losers:
(1) -> -1 point
(3) -> -1 point
(5) -> -1 point
(6) -> -1 point

Net result = 2 points
So what are

1. your win rate, or win:lose ratio

2. your profit:loss ratio

3. your maximum loss on any single trade

4. your longest uninterrupted string of losing trades
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Old Aug 18, 2006, 4:21pm   #231
 
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Quote:
Originally Posted by dbphoenix
So what are

1. your win rate, or win:lose ratio

2. your profit:loss ratio

3. your maximum loss on any single trade

4. your longest uninterrupted string of losing trades
Based on this particular example:
1. 1:2
2. 3:1
3. 1 point
4. 2 trades
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Old Aug 18, 2006, 4:35pm   #232
 
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Based on this particular example:

2. 3:1
How did you arrive at this number?
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Old Aug 18, 2006, 4:38pm   #233
 
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How did you arrive at this number?
The profit I take from each trade = 3 points, the (stop)loss = 1 point.
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Old Aug 18, 2006, 4:47pm   #234
 
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The profit I take from each trade = 3 points, the (stop)loss = 1 point.
That's a reward:risk ratio, not a profit:loss ratio. The latter is the ratio of profits to losses.
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Old Aug 18, 2006, 6:38pm   #235
 
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Do you have your profit:loss ratio yet?
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Old Aug 18, 2006, 6:53pm   #236
 
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Quote:
Originally Posted by dbphoenix
Do you have your profit:loss ratio yet?
sorry, I was afk
3:2 then?
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Old Aug 18, 2006, 6:59pm   #237
 
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Quote:
Originally Posted by dbphoenix
That's a reward:risk ratio, not a profit:loss ratio. The latter is the ratio of profits to losses.
This comes from traderpedia and that's why I answered 3:1 : "The Profit/Loss ratio is generally taken to be the ratio between a trading system's average winning trade result and its average losing trade result. For example, if a particular system's winners average 1.50 points and the losers averaged 0.75 points, the Profit/Loss ratio would be 2.0 (1.75/0.75)."
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Old Aug 18, 2006, 7:04pm   #238
 
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Originally Posted by firewalker99
This comes from traderpedia and that's why I answered 3:1 : "The Profit/Loss ratio is generally taken to be the ratio between a trading system's average winning trade result and its average losing trade result. For example, if a particular system's winners average 1.50 points and the losers averaged 0.75 points, the Profit/Loss ratio would be 2.0 (1.75/0.75)."
Your profits are not three times your losses. Therefore, for this purpose, I suggest you make a simple comparison.

Now go on to the next chart in the series: same trigger, same target, same stop. Then bring all your records up to date at that point.
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Old Aug 18, 2006, 7:39pm   #239
 
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Quote:
Originally Posted by dbphoenix
Your profits are not three times your losses. Therefore, for this purpose, I suggest you make a simple comparison.
6 points gained, 4 points lost, doesn't that add up to 3:2 or am I still hitting it wrong?

Quote:
Originally Posted by dbphoenix
Now go on to the next chart in the series: same trigger, same target, same stop. Then bring all your records up to date at that point.
Do you mean the next couple of charts, because the next one in the series would only add one entry?
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Old Aug 18, 2006, 7:46pm   #240
 
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Quote:
Originally Posted by firewalker99
6 points gained, 4 points lost, doesn't that add up to 3:2 or am I still hitting it wrong?
3:2 is correct.

Quote:
Do you mean the next couple of charts, because the next one in the series would only add one entry?
Just the next chart.
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