Target of 10 points

[badtrader]

Mark A.Ritchie Market wizards, used a stop of 3 points and a target of 1 points on the s&p.Ask why he used a big stop over his target. He said it was about probabilities

 

[SOCRATES]

Few! just Log on, thanks for the replies cant get through them all. The market in question is the Mini Russel2000 10 points shows up as a 1 point move,example 664.20 ..665.20.

The only way I can prove you wrong is trade it live for 1 day. to shut SOCRATES up.

Ha ! Ha ! Ha !

I have finally discovered what it is you lot are going round the houses about.



WHAT YOU ARE TALKING ABOUT IN REALITY IS TICKS AND NOT POINTS.....


A TICK is one TENTH of a point and not a WHOLE point !


It just goes to show the abysmal levels of ignorance to be found on these boards.


If you are not embarrassed by this it can only mean you are actually proud of being ignorant.

Ha ! Ha ! Ha !

But the argument of risking one point to gain one point is still STUPID, perfectly STUPID.

 

[JonnyT]

But the argument of risking one point to gain one point is still STUPID, perfectly STUPID.

No that statement is stupid if you do not factor in the ratio of winners to losers.

If I won 90% which such a strategy then I personally would be over the moon.

However whether this is possible is entirely a different matter.

JonnyT

 

[Profitaker]

Mark A.Ritchie Market wizards, used a stop of 3 points and a target of 1 points on the s&p.Ask why he used a big stop over his target. He said it was about probabilities

Mr. Ritchie is absolutley right.

SOC - points, ticks, pips matters not to the debate. You really are priceless LOL

 

[BullMarket]

I’ve done a good bit of research on the subject of risk management. I’ve studied the foreign exchange market and used only the Euro/Usd pair. I set-up the experiment by buying and exiting the position by either being stopped out or taking profit.

I find with a risk reward ratio of 3:1 you’ll have long periods of winning but if odds move slightly against you then your losses snowball very quick, and the inverse is also true about a R/R of 1:3, you will loss about 75% of your trades but a slight shift into your favor has the same snow balling effect. A true 1:1 risk reward is impossible due to spread, or commission, you would losses slightly more then you win and a slight shift in odds would have you close to break even or slightly in profit.


Risk/Reward W/L to break even Percentage won to B/E.
1:3 0.33 25%
1:2 0.5 33%
1:1 1.0 50%
2:1 2.0 66%
3:1 3.0 75%



-Frank

 

[BullMarket]

That post didn’t come out as expected. Well here’s my research so far. It’s very scruffy, just notes really

well enjoy,

-Frank

 

[Splitlink]

What I fail to see here is the logic behind a trader's thinking when he says that he is going to take only the best trades and they must start to move up at once. Then, he puts a 10 point stop under it. If he is so sure, why does he do that? IMO, if he does that, he is giving money made on winning trades back to the market.

Split

 

[commanderco]

What I fail to see here is the logic behind a trader's thinking when he says that he is going to take only the best trades and they must start to move up at once. Then, he puts a 10 point stop under it. If he is so sure, why does he do that? IMO, if he does that, he is giving money made on winning trades back to the market.

Split

This is because these ideas are being posted by hypothesizers, not by Traders.

If you want to scalp the mini Russell profitably you need a 3 tic stop maximum and you will be taking profits between 7 & 20 tics with a creeping stop.
Once you are profitable, bring your stop up to cover.
It is quite possible to use a 2 tic initial stop, but quite frankly your brainpower is better devoted towards your exit and creeping stop. In other words, managing your trade.
Keep in mind that as a Scalper, if your are not prepared to commit a large number of lots to your strategy, then you simply do not have a strategy. In fact you have not even left the classroom.
Harsh words!! Well it is your time you are spending, travelling in circles and one day it might even be your money on the line.

 

[SOCRATES]

Mr. Ritchie is absolutley right.

SOC - points, ticks, pips matters not to the debate. You really are priceless LOL

Yes indeed, you said it ! I am outrageous, priceless and therefore unaffordable and you are the opposite.

 

[SOCRATES]

This is because these ideas are being posted by hypothesizers, not by Traders.

If you want to scalp the mini Russell profitably you need a 3 tic stop maximum and you will be taking profits between 7 & 20 tics with a creeping stop.
Once you are profitable, bring your stop up to cover.
It is quite possible to use a 2 tic initial stop, but quite frankly your brainpower is better devoted towards your exit and creeping stop. In other words, managing your trade.
Keep in mind that as a Scalper, if your are not prepared to commit a large number of lots to your strategy, then you simply do not have a strategy. In fact you have not even left the classroom.
Harsh words!! Well it is your time you are spending, travelling in circles and one day it might even be your money on the line.

Well, at last someone has finally pinned it, what relief !

You are absolutely correct, Commanderco.

But it has taken 88 posts for the cavalry to finally arrive.

 

[badtrader]

This is because these ideas are being posted by hypothesizers, not by Traders.

If you want to scalp the mini Russell profitably you need a 3 tic stop maximum and you will be taking profits between 7 & 20 tics with a creeping stop.
Once you are profitable, bring your stop up to cover.
It is quite possible to use a 2 tic initial stop, but quite frankly your brainpower is better devoted towards your exit and creeping stop. In other words, managing your trade.
Keep in mind that as a Scalper, if your are not prepared to commit a large number of lots to your strategy, then you simply do not have a strategy. In fact you have not even left the classroom.
Harsh words!! Well it is your time you are spending, travelling in circles and one day it might even be your money on the line.

Wrong 3 point stop.I would guess you have not scalp the russel.bottom line I make money with 80% wins

 

[commanderco]

Wrong 3 point stop.I would guess you have not scalp the russel.bottom line I make money with 80% wins

In which case you are a goodtrader, Badtrader.

 

[badtrader]

In which case you are a goodtrader, Badtrader.

I am, and hey who have taken 2 stars off me

 

[silviaic]

That post didn’t come out as expected. Well here’s my research so far. It’s very scruffy, just notes really

well enjoy,

-Frank

Hi Frank,

I just wanted to ask few questions about your calculations, which I think are very interesting.

How do you perform your tests? Do you run a program over records of data? How many? Can you give more specifications about the simulation/test process?

In one of your tests you say:

With a stop loss twice the size of the profit target cutting the lot size in half after prices have moved half of the way to the stop loss will decreased the return on the account and the probability of winning trades.
:

Isn't this the same as moving your stop loss towards your entry? If not, I think I don't understand the statement...

And finally, I don't understand where your last table with the ratios comes from...

Lots of questions, I know , I know ...Thanks,

Sivia.

 

[commanderco]

I am, and hey who have taken 2 stars off me

BT ....Is that I am? or I am!

 

[badtrader]

Lunch time.just made 4 Mini Russel points, 5 Trades no loss 1 B/E.

 

[SOCRATES]

Lunch time.just made 4 Mini Russel points, 5 Trades no loss 1 B/E.

And.....one of the missing stars has just reappeared.....marvellous, I am pleased for you.:cheesy:

 

[BullMarket]

Hi Frank,

I just wanted to ask few questions about your calculations, which I think are very interesting.

How do you perform your tests? Do you run a program over records of data? How many? Can you give more specifications about the simulation/test process?

In one of your tests you say:



Isn't this the same as moving your stop loss towards your entry? If not, I think I don't understand the statement...

And finally, I don't understand where your last table with the ratios comes from...

Lots of questions, I know , I know ...Thanks,

Sivia.

Hi Sivia,

I use Strategy Builder FX Ver. 3.86 Build 6414, to run my simulations. I’m using only the Euro/Usd pair.

Test on the 15 minute charts span from 7/1/05 14:45 to about 10/28/05 22:45. More data is added
every day so theses date are just estimations. Which is about 19 thousand bars, e.g. one bar ever fifteen minutes.


The four hour chart spans dates from 7/16/2002 12:00:00 AM to 10/28/2005 8:00:00 PM and finally the day chart spans dates from 9/22/1989 12:00:00 AM to 10/28/2005 12:00:00 AM.

The number of trades taken per time frames fluctuates. The day time frame has about two thousands trades and the 15 minutes charts have only about 60 trades. These are only rough approximations it’s entirely dependent on the probability of a move of x amount of pips in x amount of time.


“With a stop loss twice the size of the profit target cutting the lot size in half after prices have moved half of the way to the stop loss will decreased the return on the account and the probability of winning trades.”

Sorry, about to notes! It’s a bit confusing. It wasn’t meant to be read just yet!!.

What I was testing was profit taking. Once price had moved half way to the stop loss, I would cut the position size in half. The theory behind it was that the probability of price rebounding and moving back to the profit target was greatly reduced and by cutting losses you could hope to achieve a greater return.

And the last table.

The risk reward ratio is.

Stop loss size : Target proft size.

Ex.1
10 pips target and a 20 pip stop loss would be 1:2 R:R ratio.


W/L is the win loss ratio. It’s the winning trades divided by the loosing trades.

Ex.2
75 winning trades / 25 loosing trades is 3.0 or 75% winning trades and 25% loosing trades.


If you like to run the tests yourself here’s to code. I use.

variables : LastBarCount(0);

SetLoopCount(0);
if(TotalTrades == 0 and LastBarCount != bars )then {
LastBarCount = bars;
SetOrder(OP_BUY,lots,Ask,0,Ask-stoploss*Point,Ask+takeprofit*Point,Blue);
}

Hope this helps!
-Frank

 

[badtrader]

Hello BullMarket

Did you say that With a stop loss the same size of the profit target cutting the lot size in half after prices have moved half of the way to the profit target will have similar results as test 4

Test 4.
S/L 70

T/P 35

Lot size 1

 

[BullMarket]

Hello BullMarket

Did you say that With a stop loss the same size of the profit target cutting the lot size in half after prices have moved half of the way to the profit target will have similar results as test 4

Test 4.
S/L 70

T/P 35

Lot size 1

It’s results were identical to test 4 actually but, I need to retest the profit taking section of my research. I haven’t reached a firm conclusion on profit taking yet.

-Frank