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 ...

Aug 18, 2006, 3:43pm   #226

Joined Aug 2003
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.

Aug 18, 2006, 3:52pm   #227

Joined Jul 2006
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.

Aug 18, 2006, 3:58pm   #228

Joined Aug 2003
Quote:
 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.

Aug 18, 2006, 4:12pm   #229

Joined Jul 2006
Quote:
 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

Aug 18, 2006, 4:18pm   #230

Joined Aug 2003
Quote:
 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

Aug 18, 2006, 4:21pm   #231

Joined Jul 2006
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

Aug 18, 2006, 4:35pm   #232

Joined Aug 2003
Quote:
 Originally Posted by firewalker99 Based on this particular example: 2. 3:1
How did you arrive at this number?

Aug 18, 2006, 4:38pm   #233

Joined Jul 2006
Quote:
 Originally Posted by dbphoenix How did you arrive at this number?
The profit I take from each trade = 3 points, the (stop)loss = 1 point.

Aug 18, 2006, 4:47pm   #234

Joined Aug 2003
Quote:
 Originally Posted by firewalker99 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.

 Aug 18, 2006, 6:38pm #235 Joined Aug 2003 Do you have your profit:loss ratio yet?
Aug 18, 2006, 6:53pm   #236

Joined Jul 2006
Quote:
 Originally Posted by dbphoenix Do you have your profit:loss ratio yet?
sorry, I was afk
3:2 then?

Aug 18, 2006, 6:59pm   #237

Joined Jul 2006
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)."

Aug 18, 2006, 7:04pm   #238

Joined Aug 2003
Quote:
 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.

Aug 18, 2006, 7:39pm   #239

Joined Jul 2006
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?

Aug 18, 2006, 7:46pm   #240

Joined Aug 2003
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.