Direction is everything.

[JRP2891]

Generalisation yes, but let's face it, when you enter an upwards break-out you are buying at the high, with the aim of selling even higher. It can be worked but it's a difficult thing for newbies, all their previous life experience tells them to buy something with a recently reduced price.

That's right, and in my experience doing what's the most counter-intuitive will give you the greatest risk adjusted returns.

 

[oildaytrader]

The only way to make money is to be sure that the market direction is correct and, if it isn't, to reverse it ASAP or, failing that, at least, to be out of the market.

If the above is correct, all other other considerations, systems, paid for, or not, are superfluous.

Anyone coming into the trading arena should know this.

Deducing market direction is not an easy task, although it may seem so. Nevertheless, concentrate all your attention on this because it is the fundamental pillar of successful trading.

Markets trend 20 % of the time , markets range 80 % of the time.The big money is to be made out of ranging markets,if only ODT would give the secret trading formula away.

The formula is for trading indices S and P , Dow,Nasdaq, Dax , ftse, russel.It can make around 150 % per annum without compounding.

How ?Ask me How!

 

[FX Bandit]

Markets trend 20 % of the time , markets range 80 % of the time.The big money is to be made out of ranging markets,if only ODT would give the secret trading formula away.

The formula is for trading indices S and P , Dow,Nasdaq, Dax , ftse, russel.It can make around 150 % per annum without compounding.

How ?Ask me How!

ODT, you're being victimised. Most of the abuse I've been giving you has been allowed to stand, the abuse directed at other people has gone.

That said, your systems couldn't get 150% in 150 years, let alone 1 year.

 

[Lightning McQueen]

ODT, you're being victimised. Most of the abuse I've been giving you has been allowed to stand, the abuse directed at other people has gone.

that is because we haven't got around to all your posts yet, a big chunk of them have been removed today from three threads.

tomorrow is another day

 

[FX Bandit]

that is because we haven't got around to all your posts yet, a big chunk of them have been removed today from three threads.

tomorrow is another day

I'm delighted to hear it.

There is but one that causes me regret when I consider that it shall be viewed no more - that one however cut perhaps a little close to the bone, and I cannot be surprised at its passing.

Ah me! When I think of my days of innocence, when first I glimpsed this forum all unknowing!

 

[oildaytrader]

ODT, you're being victimised. Most of the abuse I've been giving you has been allowed to stand, the abuse directed at other people has gone.

That said, your systems couldn't get 150% in 150 years, let alone 1 year.

Behind your statement is a clueless noob.

 

[meanreversion]

That's right, and in my experience doing what's the most counter-intuitive will give you the greatest risk adjusted returns.

This is the uncomfortable truth of trading. What seems to be "right" or to "make sense" is often the wrong thing to do. I did a little testing where the system reduced bet size from (e.g.) 1 pct to 0.5 pct of equity when drawdown exceeded a certain amount.. this just meant it took longer to get out of the hole, even though reducing bet size during a losing streak seems like the right thing to do.

Similarly, I've experimented with systems which take money off the table fairly frequently vs those which leave equity open through retracements, and the latter systems tend to perform better over time, at the expense of one feeling comfortable.

 

[wackypete2]

This is the uncomfortable truth of trading. What seems to be "right" or to "make sense" is often the wrong thing to do. I did a little testing where the system reduced bet size from (e.g.) 1 pct to 0.5 pct of equity when drawdown exceeded a certain amount.. this just meant it took longer to get out of the hole, even though reducing bet size during a losing streak seems like the right thing to do.

Similarly, I've experimented with systems which take money off the table fairly frequently vs those which leave equity open through retracements, and the latter systems tend to perform better over time, at the expense of one feeling comfortable.

Of course feeling uncomfortable in trades is no way to trade. Eventually the trader will close out the trades rather than following through.

Peter

 

[meanreversion]

That's why the Herman Miller Aeron chair is the way to go, nice n comfy.

 

[JRP2891]

This is the uncomfortable truth of trading. What seems to be "right" or to "make sense" is often the wrong thing to do. I did a little testing where the system reduced bet size from (e.g.) 1 pct to 0.5 pct of equity when drawdown exceeded a certain amount.. this just meant it took longer to get out of the hole, even though reducing bet size during a losing streak seems like the right thing to do.

Similarly, I've experimented with systems which take money off the table fairly frequently vs those which leave equity open through retracements, and the latter systems tend to perform better over time, at the expense of one feeling comfortable.

I think there may be a case for reducing bet size if you're a purely discretionary trader in order to get your 'feel' and confidence to return, but for a predominantly systems/mechanical trader, like you said, it could put you months/years back in progress.

Scaling out of a portion of the trade more than likely does reduce returns, however it smoothes out the equity curve, or at least i know it does in my case. Again, it comes down to your drawdown tolerance, and personally speaking, mine are high enough even with taking some off the table.

 

[meanreversion]

I think there may be a case for reducing bet size if you're a purely discretionary trader in order to get your 'feel' and confidence to return, but for a predominantly systems/mechanical trader, like you said, it could put you months/years back in progress.

Scaling out of a portion of the trade more than likely does reduce returns, however it smoothes out the equity curve, or at least i know it does in my case. Again, it comes down to your drawdown tolerance, and personally speaking, mine are high enough even with taking some off the table.

Do you occasionally override your system as and when you feel it to be appropriate?

 

[JRP2891]

Do you occasionally override your system as and when you feel it to be appropriate?

I do override it sometimes yes, usually by trying to get an earlier entry into a move which i think is likely to happen. I also vary my trade size as i do not think that each entry signal has the same edge. However, i never pass up an entry, no matter how bad it looks.

I started very mechanically based with my system, but the more experience i gain and the more i get to know my system better, the more discretion i use. I know many will disagree with this concept as most will say you can't mix the two, however i believe that's how you turn a 50% year into a 100+% year.

 

[meanreversion]

Interesting ... what kind of drawdown do you tolerate in order to get to 100% (I think in the past you mentioned 50%, was that you?)

 

[DionysusToast]

Scaling out of a portion of the trade more than likely does reduce returns, however it smoothes out the equity curve, or at least i know it does in my case. Again, it comes down to your drawdown tolerance, and personally speaking, mine are high enough even with taking some off the table.

Surely scaling out increases your returns.

It allows you to hold onto a portion of the trade for outlying events.

 

[JRP2891]

Interesting ... what kind of drawdown do you tolerate in order to get to 100% (I think in the past you mentioned 50%, was that you?)

Yes that was me. At the reduced % level i'm trading at now, i'd expect a 40-45% drawdown for those kind of returns.

 

[JRP2891]

Surely scaling out increases your returns.

It allows you to hold onto a portion of the trade for outlying events.

As i have no targets, only a trailing stop to catch outlier trades, anything taken off would seemingly reduce the potential returns. However, there's the question of reduced leverage due to a higher number of losses as nothing has been taken off in case the trade reverses. So in that sense, scaling out might increase the returns.

But i completely agree with you for a different reason, and that's making it psychologically possible to execute my method consistently which scaling out personally helps me with.

 

[DionysusToast]

As i have no targets, only a trailing stop to catch outlier trades, anything taken off would seemingly reduce the potential returns. However, there's the question of reduced leverage due to a higher number of losses as nothing has been taken off in case the trade reverses. So in that sense, scaling out might increase the returns.

But i completely agree with you for a different reason, and that's making it psychologically possible to execute my method consistently which scaling out personally helps me with.

Absolutely - psychologically - scaling out and booking profits makes it easier to let the remainder run...

 

[JRP2891]

Absolutely - psychologically - scaling out and booking profits makes it easier to let the remainder run...

Yes, and also equity curve moderation which reduces the severity of the drawdown making it psychologically easier to execute, and to sleep at night....

 

[meanreversion]

As Howard Cohodas would say, you guys are in "violent agreement".

Boring thread, everyone agreeing with each other, no lulz .. good stuff tho, but as we know, this is usually not allowed to last on t2w

 

[Badass Futures]

Absolutely - psychologically - scaling out and booking profits makes it easier to let the remainder run...

I used to scale out, really for the reasons that you give. But I kept detailed records and compared scaling out to exiting in one go. The difference was huge.

I think scaling out was a psychological comfort blanket for me, and it detracted from overall profits, so I don't do it any more (not saying that it's wrong).

I do think it's a good idea to keep proper records and make the decision based on evidence rather than feelings or assumptions though.