Average ticks per hour using the DOM? | Traders Hideout

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Average ticks per hour using the DOM?

  #7 (permalink)

North Carolina
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
Posts: 644 since Nov 2011

Why should a trader feel forced to take crap trades every single day just to pump up their trade sample to "a statistically significant size"?

Right, I agree that you shouldn't try to force opportunities. My point was that unless your method grants you a statistically valid number of trades per day then you do not have enough evidence to state the market is not efficient. This cannot be understood from the perspective of the trader. But, let's imagine it from the perspective of someone funding a trader or trying to decide to whether or not to trade a system, a great method would generate a statistically valid number of trades per day with a high enough profit factor to provide a 95%-99% confidence of making money. Most methods cannot do that so they are not really good evidence against efficient markets. Right, if you cannot increase the trades while keeping the win ratio and profit factor up then it doesn't provide any additional confidence, either. By "cheating", I do not mean that it is not the correct action to take, I simply mean that it is not providing good evidence against efficient markets. For example, if a trader takes a large tail risk then that it becomes more difficult to know whether or not they have an edge. In same way, if you have some relatively large wins, that might be the correct action as to what the market provided, but it wouldn't be as useful for someone trying to know whether or not you really have an edge.

2) Reducing your risk doesn't mean that you increase your trading costs. Reducing your risk can be something like leaning on a zone with a solid setup. Sometimes I have trades that don't go against me at all because I picked the right price at which to do business. And stop losses save my ass more than they hurt me. Maybe that's just me though.

I disagree on this. If you reduce your risk and you don't increase your trading costs, you will be increasing shortfall risk in the form of trying to catch higher R trades. If you are catching bigger trades, you are most-likely compounding the risk of your open profits. Example, if you catch a $1,000 gain with $200 risk then it is incomplete to state you risked $200 to make $1,000. You risked all your open profits which means at +$1,000 you were truly risking $1200 if you didn't trail your stop. Trailing stops rarely works. There is no free lunch in trading.

This is a critical relationship to understand for any scalper. As you reduce your risk per trade, your trading costs will become a bigger percentage of your gross profits. That's why the exchange makes special deals for higher frequency traders or else they wouldn't be able to make any profit because their profits are below the cost threshold. Again, this is a super critical relationship to understand esp for the scalper but also important for system developers. Generally speaking, if you have a profitable method then the more trades you take the more mediocre the trade will will be, the lower the profit factor, and the greater the gross profit.

Last edited by tpredictor; April 17th, 2018 at 05:15 PM.
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