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A Time Traveler and a Trade

  #12 (permalink)

Trading Experience: Intermediate
Platform: Bookmap and Jigsaw DOM
Broker/Data: Stage 5 Trading
Favorite Futures: ZN
lax99's Avatar
Posts: 433 since Jun 2015
Thanks: 623 given, 809 received

bobwest View Post
I was going to say something on this part too, but decided to pass on it. I didn't quite understand the question you were presenting.

If I'm going to lose 8 ticks before commissions, then I don't want to take 8 separate 1-tick pre-commission losses, plus the commissions on each of the eight trades. Who would?

If the question is about taking a certain net loss, including commissions, I wouldn't care how it was distributed, since the result would be the same.

Since actual P/L is always net including commissions, I don't really get the premise. Can you help me understand what you mean?


I agree that from a pure P&L standpoint it makes sense to just take one -8 and pay one round turn. This is the point that a buddy of mine agreed with.

My thought was that I'd rather get as many looks as possible for a winning trade, instead of just swallow the -8 on one trade. If you lose those ticks over twelve or twenty trades then yes, you're paying a good deal on commissions. But you're also seeing a whole lot more market action, you're in the flow, and you're better equipped to make a decision about whether you're seeing the market well or not.

Losing on two or three trades in a row is almost a certainty. Losing on 8 in a row means that you're not seeing the market well, and that you might have to take a step back for a moment.

The whole premise of the question is what the string of losers means for you and your trading going forward. Yes, you've lost more money by taking more trades. But you've paid for information which might suggest that you're in a losing streak and that you need to cut back.

Going -8 on two trades doesn't give you much information. It could very well be the start of a winning run! But you won't know that it's the start of a losing streak until a few more trades go through. At that point you might be -20!

It's easy to argue one point or the other which is why I posed the question. It's always interesting to see what traders think about it.

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