Scraping The Barrel and Fool's Gold

[wisestguy]

About 12 pips a day after commission since Nov 2004 on a £7k starting balance, i.e just under 0.5% a day. Nothing to shout about, for sure, but at least I'm no longer an intraday loser.

That's not very good , if I may say , add your time spent + other costs - software , elec etc .
you're not far above just break even .

and this is only not including your losing streak , if you inlcude that , then your returns would be much worse.

 

[wisestguy]

If a person were to do this
yesterday's balance + (yesterday's balance * 0.0045) * 300 trading days since nov 2004 =
-and let it compound - take nothing out, that's about about $27K. . Now that would be a nice trading stake....

I am always amazed how little %'s compounded daily add up so fast!

JO

and I amazed at how people swallow this compounding theory without scrutiny . compounding INCREASES risk .


bottom line: how much is the reward over capital at risk since he has been scraping / compounding ?

any proof ? statements etc ? no , I thought not .

 

[FetteredChinos]

... (yesterday's balance * 0.0045) * 300 trading days since nov 2004 =

another time traveller? PM me for more details.

:cheesy:

 

[FetteredChinos]

compounding INCREASES risk .


.

erm no, not necessarily..

risk in absolute terms yes, ie the amount lost on a certain trade hopefully would be materially larger after a few years trading than when starting out, but in % terms, assuming a fixed fraction money management, then there is no difference..


we are in the risk business here. returns are directly proportional to the risk involved. it is a case of controlling the risks, and deciding what level of risk is appropriate for the individual, in order to achieve satisfactory returns.

 

[JumpOff]

another time traveller? PM me for more details.

:cheesy:

Ooops - thats about 80 trading days since nov. of
2004 . Which would make the pot a tad less than 10K. Perhaps as frugi says, it's nothing to shout about, but it's better than a poke in the eye, and it lays the ground work for larger things to come.

IMO, one of the best things about short term trading is that there are plenty of opportunities to hone your exit and entry skills and to learn to patiently wait for the really good setups. And it allows a beginner to have a logical stop that is also small enough that it doesn't cause emotional stress to close a losing trade. On the larger timeframes, a reasonable, logical stop might be equal to a house payment. On the shorter term, maybe a pizza dinner. It all seems fractal to me - with the same kind of volume and price patterns occuring in every scale, so I don't see that the time frame makes that much difference (as long as your transaction costs are really low).

To each his own, - and sorry about the math error!

JO

 

[wisestguy]

erm no, not necessarily..

risk in absolute terms yes, ie the amount lost on a certain trade hopefully would be materially larger after a few years trading than when starting out, but in % terms, assuming a fixed fraction money management, then there is no difference..
we are in the risk business here. returns are directly proportional to the risk involved. it is a case of controlling the risks, and deciding what level of risk is appropriate for the individual, in order to achieve satisfactory returns.

Sorry , that smells to me .

you assume , that you will be winning all the way til your % losses remain constant . if anything if we go by the evidence of frugi's trades , you would have to assume the opposite - that some time soon you will go through a losing streak as fru admitted himself.

and if this occurs when you have cleverly compounded your stakes , then you will not reach your " same as before " % losses anytime soon.

it seems to me that so called compounding is just adding your wins to the next stake which mean 2 things and is really called one :

- gamblers call it double or nothing , 2x your stake to increase your pot by X times

- dumb really you could lose all your gains and more if you get a small losing streak when you double up . something compouders never tell you .

- the real problem with these people is that they are underfunded traders trying to make up their defects with gambling tactics , we know where that will end up .

So no , you are in the risk business and I AM IN THE RISK REDUCTION business. big difference.

a stupid ex boss of mine once used that line and he was a gutless Wker who never have the ghoulies to trade nor to exercise real risk control whilst trading. I had no respect for him .

I hope you are not of the ilk .

 

[wisestguy]

Ooops - thats about 80 trading days since nov. of
2004 . Which would make the pot a tad less than 10K. Perhaps as frugi says, it's nothing to shout about, but it's better than a poke in the eye, and it lays the ground work for larger things to come.

IMO, one of the best things about short term trading is that there are plenty of opportunities to hone your exit and entry skills and to learn to patiently wait for the really good setups. And it allows a beginner to have a logical stop that is also small enough that it doesn't cause emotional stress to close a losing trade. On the larger timeframes, a reasonable, logical stop might be equal to a house payment. On the shorter term, maybe a pizza dinner. It all seems fractal to me - with the same kind of volume and price patterns occuring in every scale, so I don't see that the time frame makes that much difference (as long as your transaction costs are really low).

To each his own, - and sorry about the math error!

JO

50% return on 6 months is good ?? account for tax you how much do you have ?? not even worth bothering with for me.

My account ran to 10 X my stake over 2 years , and setteld at 6 X .

I have to ask 3 questions to answer the rest :

- do you use real stops , ie ) keyed in ones not mental BS ?

- if so how far away is your entry from the stop loss ?

- and what are your returns over you risk capital net comms, tax etc ?

 

[juanbyte]

Hi Wiseguy

Could you explain what this means?

My account ran to 10 X my stake over 2 years , and setteld at 6 X .

Does 10 x my stake mean that if you started with £2k you would have made £20k?

Does ran to 10 x and settled at 6 x mean that you had a 40% drawdown?

Please reply because I have no idea what you are saying, if you could post your statements it would be helpful.

You seem to be adverse to compounding, are you saying that you have never increased your stake in your 2 years of trading?

 

[wisestguy]

you seem to understand exactly what I say , so what's the damn fuss ?

Yes there was a large 1 off loss due to a stupid options trade I took , which is the only option deal I EVER made . was very uncharacteristic of me. this came about due to boredom and the " bright " idea syndrome . I have never repeated that mistake again.

and technically it may be a drawdown , but it must be said that this was from the level of TEN x my risk cap .

and I have never compounded the way you do , I think it is a fool's gold .

I will post my staement when I have a enough space to do so , 2 years of trading is a lot of scanning ,
unlike some people who post 5 weeks of trading and call it " proof that my system " works .

in the meantime , I think you ( JB ) need to furnish some proof that your so called compounding works ,as it is beyond doubt that swing trading , scalping , arbing does work , and has been endorsed by many famous traders.

whereas the mythological scraping + compounding has no real proof whatsoever behind it apart from the hyping that a few individuals cough up .


bottom line: how much is the reward over capital at risk since you have been scraping / compounding ?

 

[RUDEBOY]

Wisestguy, i think you are right. Forget the figure manipulators. You are a scalper (according to buy/bid), or you are a scraper! It's that simple!

 

[juanbyte]

Hi Wiseguy

You have so many misconceptions it is difficult to know were to begin.

I do have one question to ask first. What is your R/R, your figures and comments do not seem to add up?

You say that the 40% loss was due to 1 trade, that would mean that you have risked 40% of your 20K on that trade which is 8k, this is far too much to risk on asingle trade, many people believe that one should only risk 2% max.
Also, if you risked 8k on that trade how can you say that you have not increased your stakes as you would have only started with 2k, so that particular trade was 4x your original capital. Maybe it will become clear when you post your statements.

Anyway, must get on.
You keep on mentioning the risk/reward ratio, do you think that this is more inportant than the win/lose ratio? Is so you are very much wrong for both mathematically and pschologically the win percentage should be ones main concern.

The best way to illustrate this is to use the same set of W/L and R/R values and just reverse them and then we are comparing like for like, see graphs below:-

This shows the results of a 60% win system with a R/R of 90%. Note that the lines are all over the place, this is because the lower the win% the higher the probabillity of longer losing runs.
The maximum win over the period is 220 with a 0.14 expectancy per trade.

We now see a chart using the same figures but in reverse i.e. a 90% win ratio and a R/R of just 60%. Notice how the lines are much straighter with no nagative deviation as in the first. The maximum win is now 317 which is a 44% improvement in profits and the expectancy per trade has risen to 0.44.

So the profits are greater and personally pschologically I prefer winning more often.

and I have never compounded the way you do , I think it is a fool's gold .

You do not know how I compound my trading so I do not know how you can make that comment.
FC is quite correct, if you risk the same perctage of your capital per trade the risk is exactly the same. You mention that there will be an eventual long losing run, this has nothing to do with anything, this long losing run will not wait untill you have built up a large bank it could happen anytime even on your first few trades. So your assumption that you are reducing risk is flawed because your maximum risk is in your first few trades.

There is never any copromising with you is there, it is compound or not compound. Actually somewhere in between is the best. What is wrong with taking 50% of your profits monthly and reinvesting the rest to boost your returns, I like to take money out every month, it it isn't there I can't lose it.

I will post my staement when I have a enough space to do so , 2 years of trading is a lot of scanning ,
unlike some people who post 5 weeks of trading and call it " proof that my system " works

What is wrong with posting 5 weeks of trading when one can make 9x the amount that you did over 2 years. Why would anyone want to trade for 1 year 11 months longer for 1/9th of the profits???

I expect your usual "Bull$hit, Boll@cks, don't believe it" reply with nothing to back up what you are saying.

 

[wisestguy]

Wisestguy, i think you are right. Forget the figure manipulators. You are a scalper (according to buy/bid), or you are a scraper! It's that simple!

absolutely , no arguments there .

you are either fish or FOUL . scalping ( the real deal ) or scraping ( the fakers )

 

[wisestguy]

yeah , no surprises here .

first of , R:R matters a great deal . If I have a R:R of 6:1 , it's a whole lot better than a crappy 1.7 : 1 even if you have 99% winners. if you are trying to fiddle you way around this very basic concept , them I can't help you .

if you are trying to discredit me due to my record , I think you'd better try something else , most people would rip my hand off if i offered that sort of reutrn to them , 1 large option loss notwithstanding.

at least I am honest enough to say so , which is so far more than I can say for you . you have prensetd nothing but theoretical blab which proves nothing other than what it is - theory .

and you have a lot to prove , the issue is bigger than the red herring of my record , as I have stated i am a old fashined swing trader , this and other methods are proven .

But no single star trader recommends scraping . So what proof do you have that it works well enough to consider trading .

those graphs are nothing - what are they ? just churned out numbers from some little formula .
they are not even applied to REAL markets .

I have zero interest in ' converting anyone ' to my way to doing things , but proof is needed to state that this scraping business works , coz sure as hell the best in the world are not endorsing it .

I have to ask 3 questions to answer the rest :

- do you use real stops , ie ) keyed in ones not mental BS ?

- if so how far away is your entry from the stop loss ?

- and what are your returns over you risk capital net comms, tax etc ?

straight answers please .

 

[juanbyte]

those graphs are nothing - what are they ?

This applet simulates an equity curve of your account over the long term after systematically applying your trading rule with known parameters of Win Probability and Win/Loss ratio. A whole curve consists of about 450 pixels, or trades. The random generator decides (as the market does) with a given probability whether you win or lose in a given trade. So the equity trajectory is generated.

i.e. if you have a certain W/L and R/R ratios then these are the sort of equity curves you can expect to see.

I have to ask 3 questions to answer the rest :

- do you use real stops , ie ) keyed in ones not mental BS ?

I certainly do use real stops, I use a free piece of software called bracket-trader that puts an entry order, a stop-loss order and several profit target orders into the market with one click of the mouse.

- if so how far away is your entry from the stop loss ?

For the scaping method as you call it, it is 17 points which represents 3.4%of my trading capital. Why do you ask?

- and what are your returns over you risk capital net comms, tax etc ?

Without compounding this method of trading the first hour produces between 20%-25% per month.

Can you answer just 2 questions
What is your Win/Lose ratio?

And what is your Risk/Reward ratio?

If I new these I could see where you are going wrong and then would be able to help you.

 

[wisestguy]

This applet simulates an equity curve of your account over the long term after systematically applying your trading rule with known parameters of Win Probability and Win/Loss ratio. A whole curve consists of about 450 pixels, or trades. The random generator decides (as the market does) with a given probability whether you win or lose in a given trade. So the equity trajectory is generated.

i.e. if you have a certain W/L and R/R ratios then these are the sort of equity curves you can expect to see.

I certainly do use real stops, I use a free piece of software called bracket-trader that puts an entry order, a stop-loss order and several profit target orders into the market with one click of the mouse.

For the scaping method as you call it, it is 17 points which represents 3.4%of my trading capital. Why do you ask?

Without compounding this method of trading the first hour produces between 20%-25% per month.

Can you answer just 2 questions
What is your Win/Lose ratio?

And what is your Risk/Reward ratio?

If I new these I could see where you are going wrong and then would be able to help you.

more questions

- Who cares about a SIMULATION curve ?? has it worked in real markets ?

' The random generator decides (as the market does) with a given probability whether you win or lose in a given trade '

HAHAHAHAHAAH.

listen to this guys , a generator is the same as a market ? anyone who's ever traded before will tell you that the market will never behave the way some dumb generator wants it to . your " results" are all fictional mate , the only results that count are those " generated " by your REAL trades , anything else is BS . you are funny . I have to conclude from this that you have NOT used yours or any system with great success , your only wins seems to be generated from some dumb sofware . wow , like , any fool cold be a millionaire , shame they are all paper trades.

- what do you mean ... make in the first hour between 20%-25% per month? do you mean for 1 hour's a day trading you could make 20-25% a month ?

this is getting more ridiculous by the post.

you have AVOIDED the question , let me rephrse :

what are your returns over you risk capital net comms, tax etc , over 2 years or since you've been using your so called system ?

- if I had this info I could help you make some real money instead of this mickey mouse BS .

HAHAHHAAHAHA , you're not the only one that can indulge in self flattery .


replies

- I thought you didn't care for R:R ratios ? just because I stated how important it was in my book ? do you not have the courage of your own convictions . and you know what my R:R is, why feign ignorance - jealous ?

- if your SL is 17 pts away from your entry and you are scraping , your R:R per trade is going to be p#ss poor like I suspected .

 

[wisestguy]

I love the way this guy has delusions of grandeur , despite the huge holes in his game .

 

[FetteredChinos]

talking about yourself in the 3rd person again Wisest? Chris was only trying to be constructive rather than dismissive and condescending.

the point of the graphs is to show the possible variations that might occur in the future and therefore you can understand the potential risk involved based upon simple mathematical modelling.

either you are spoiling for a fight, which is a shame on such a fine summer's afternoon, or you do not appreciate what it is that Chris is getting at.

FC

 

[frugi]

WG,

So much negativity you'd worry a power station if you walked by it. Do you never have anything positive to say or is your life's mission to try and convince everyone with interminable repetition that most traders lose money? We know this already, so perhaps it's time to move on? BTW I'd stake a lot of money on Chris not being among them, far from it in fact.

 

[juanbyte]

Hi wiseguy

I answered your 3 questions how come you did not have the decency to answer the two that I asked you? Do you not know how to work out your own R/R and W/L ratios? If so I will post the formula.

- Who cares about a SIMULATION curve ?? has it worked in real markets ?

' The random generator decides (as the market does) with a given probability whether you win or lose in a given trade

The charts are just to show the difference between a high win system and a low win system, the same data is applied to both systems. Neither one is correct for everybody but I know which one I prefer. If you choose the lower win system you should just be aware of the diviations or drawdowns.

I have to conclude from this that you have NOT used yours or any system with great success , your only wins seems to be generated from some dumb sofware . wow , like , any fool cold be a millionaire , shame they are all paper trades

I am at a loss as to how you come to this conclusion, the figures are not my results or anyone else that I know. They are just a set of figures which are reversed on the two charts to highlight the difference between a high and low R/R method.

- what do you mean ... make in the first hour between 20%-25% per month? do you mean for 1 hour's a day trading you could make 20-25% a month ?

No,no,no, don't be silly, it does not take an hour a day to make 25% per month it only takes 30 minutes per day usually, it's just some days I have to wait for data to come out at 3:00pmGMT.

you have AVOIDED the question , let me rephrse :

what are your returns over you risk capital net comms, tax etc , over 2 years or since you've been using your so called system ?

I am not avoiding the question, that is a different question. I use three different methods one for the open, one for the rest of the day because the morning and afternoon sessions are quite different. The open is usually more volatile and the afternoon session tends to trend. I also trade longer terms on daily bar charts. The net profits from these was 49.6% per month although I thought we where discussing the difference between swing and scraping, this figure includes both. As I have said there is not just one way to trade and of the 2 I prefer to spend the least time in the market possible and then I can play with the grandkids, much nicer than trading. The less time you spend in the markets the less chance it has to go seriously wrong, I bet that 40% loss you made took longer than 1 hour to accumulate.

- if I had this info I could help you make some real money instead of this mickey mouse BS

I am not sure what you are saying here? Did you make more than 7.2% in 45 mintes today? Then maybe you could help, see screenshots below:-

As you can see 6 trades $205 gross, commissions -£24.72 = $180.28 net, only 100% winners (will have to do better and give 110%) :cheesy: Yes **** poor but fills my needs and represents 7.2% of my starting balance of $2500.

- I thought you didn't care for R:R ratios ?

Don't know where you get these ideas from, R/R is very important but not as important as the W/L ratio.

just because I stated how important it was in my book ?

Didn't know that you have written a book, what's the title?

and you know what my R:R is,

Sorry I have no idea what it is, you have mentioned 3:1 and 6:1, but this does not mean anything without the knowing the W/L ratio. You could have a 6:1R/R but only win 10 times out of 100, then you would actually have a negative expectancy and a losing system as below.

- if your SL is 17 pts away from your entry and you are scraping , your R:R per trade is going to be p#ss poor like I suspected .

Wrong again wiseguy. Do you know how how to calculate the R/R ? This is where I started. The maximum stop-loss of 17 points has nothing to do with the R/R ratio, which is calculated as ones average winner/average loser. I have not needed to use the maximum stop so far this year in the first hour, there have been 3 loing trades of 1,5,and 11 points which is 5.66 pts not 17. Surely your $4000 loser altered your R/R ratio considerably, if not well done.
I am sorry that you have not taken up my offer of help, it is clear to me from your comments that you are definately in need.

One of the best traits a trader can have is the ability to admit when they are wrong and when they have made a wrong trade they can then get out quickly with small losses. It is clear that you cannot do this which is evident by your 40% loser.

I do not agree with your comments about how professionals work, I would not trust any of them.
Several years ago there was a trading competition organised by a trading body for trading professionals. The results were that only 20% of them actually made money so people placing their savings with them have a 4:1 chance of losing. No thanks I prefer to look after my own.

Could you explain why you think that someone who makes 6x their starting capital over 2 years is better than someone who makes 54x their starting capital (55x if original stake included) in just 4 weeks, taking 20x starting capital as wages in between. This is what can happen if you compound just some of your profits.

 

[wisestguy]

talking about yourself in the 3rd person again Wisest? Chris was only trying to be constructive rather than dismissive and condescending.

the point of the graphs is to show the possible variations that might occur in the future and therefore you can understand the potential risk involved based upon simple mathematical modelling.

either you are spoiling for a fight, which is a shame on such a fine summer's afternoon, or you do not appreciate what it is that Chris is getting at.

FC

graphs are not real trades , neither are " future variations " .

risk is a simple concept and therefore there is no need for so called modelling unless one is trying to pull the wool over someone else's eyes

only one test applies : what are your returns over you risk capital net comms, tax etc , over 2 years or since you've been using your so called system ? most else is relevant.

if that's called spoiling for a fight in your eyes so be it , but I tell you that most people here will call it being fiercely objective and demanding proof for outlandish claims.

you as a fan and buyer of JB's system may not like that but you will have to accept that otehrs will never swallow slaes hype wholesale without proof.