arabianights
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Capturing a move is irrelevant.
Well, with some important caveats anyway.
Firstly, let's accept that none of us are Nostradamus. So under most circumstances we cannot predict market moves accurately.
It follows from this that the further a move, the less likely we are to have predicted it (1).
It follows from this that we can predict a smaller move more easily (2)
It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)
Conclusion: Don't worry about losing the big moves. Assuming you read the caveats.
So next time Trader_Dante messages you moaning about some nob who took one tick who could have taken a thousand, point him to this thread 😆
(1): Not always the case, unfortunately: for example I will often 'ignore' a price level when running a position, knowing that if said level is broken I can certainly get out past it.
(2): Almost always true, if only because price has a definite velocity and thus can reverse well before reaching ones chosen level. The exceptions are, as in caveat one, where a certain move practically necessarily is part of another move.
(3): This is the only serious caveat, as 1 & 2 are effectively artefacts of incompetence/less than perfectness. I will split into two parts
Bonus caveat (4): The above also assumes no transaction costs. If you're paying a spread or paying commission, then you are paying transaction costs, and you will have to adjust accordingly.
Comment on caveats: These are why the traditional maxim is to let your profits run and cut your losses. But if you can get around them, and a competent scalper can in my opinion, then you are perfectly at liberty to ignore said maxim 🙂
Well, with some important caveats anyway.
Firstly, let's accept that none of us are Nostradamus. So under most circumstances we cannot predict market moves accurately.
It follows from this that the further a move, the less likely we are to have predicted it (1).
It follows from this that we can predict a smaller move more easily (2)
It follows from this that we can put more size on in a smaller move. In fact, taken to its logical conclusion if we are 100% certain about a two tick move we can risk our entire account in one tick and treble it. (3)
Conclusion: Don't worry about losing the big moves. Assuming you read the caveats.
So next time Trader_Dante messages you moaning about some nob who took one tick who could have taken a thousand, point him to this thread 😆
(1): Not always the case, unfortunately: for example I will often 'ignore' a price level when running a position, knowing that if said level is broken I can certainly get out past it.
(2): Almost always true, if only because price has a definite velocity and thus can reverse well before reaching ones chosen level. The exceptions are, as in caveat one, where a certain move practically necessarily is part of another move.
(3): This is the only serious caveat, as 1 & 2 are effectively artefacts of incompetence/less than perfectness. I will split into two parts
(3a): LIQUIDITY: The above assumes a perfectly liquid market. If you need to put ten thousand lots on then assuming it's not a red eurodollar spread or something you're going to have to faff around getting in and out and will have to make allowances for that
(3b): I forgot what I was going to put here
(3b): I forgot what I was going to put here
Bonus caveat (4): The above also assumes no transaction costs. If you're paying a spread or paying commission, then you are paying transaction costs, and you will have to adjust accordingly.
Comment on caveats: These are why the traditional maxim is to let your profits run and cut your losses. But if you can get around them, and a competent scalper can in my opinion, then you are perfectly at liberty to ignore said maxim 🙂
