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Webinar: FuturesTrader71 (FT71) on Risk, Sizing, Scaling and Trade Management
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Webinar: FuturesTrader71 (FT71) on Risk, Sizing, Scaling and Trade Management

  #101 (permalink)
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emerson View Post
I remember that he had another coin-toss experiment in his Webinar 3 with a different set of rules that yielded some really interesting results. The problem was that there wasn't enough samples. One interesting rule (hopefully without giving too much away) was that the system couldn't trade during the first and last hours because there is too much directional bias during those times.

I would like to see variations of these experiments with 1000's of samples.

You are correct. Beginning prop traders were not allowed to trade in the first and last hour and that included the coin toss. A learning trader used to have a better chance in chop. I didn't want to complicate things, so I left it out for simplicity. Anyone can vary the rules as necessary.

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  #102 (permalink)
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trendisyourfriend View Post
No disrespect but maybe an analysis such as the one provided should have a prominent disclaimer. Have been inspired by the most recent commentary from Lance Begg:

"There is a tendency called hindsight bias in which the human mind views past occurrences as having been more predictable at the time than they actually were. And there is a confident belief in the fact that you would have entered at the right time, and quite likely would have targeted just the right area for maximum profits. The reality is far different. Uncertainty prevails at the hard right edge of our screen and there is actually no way we can know how we would have felt, decided or acted, were we actually trading this live. So... while this analysis actually will appear quite simple, it may not have been so obvious at the time."

Not sure there... I trade what I see which is volume and order flow based while paying attention to the big picture's context. Lance Begg? Lol! "I come from a land down under!" I think he's pretty spot on actually. He's a realist IMO.

What I'd like to know was, what was the resistance at the swing high for that particular day? I would have loved to join the offer on that. I don't trade the ES much anymore but that looked like a great day/opportunity. Like I said, it's very easy to rip apart a chart. The comments I made would have been real time based relative to volume on what was unfolding and how I trade. I hope it was fairly clear.

Cheers,
PB

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  #103 (permalink)
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Lornz View Post
I watched the webinar and I must say that I take offense at his surfing comment.

There are no wave machines in Oslo, but there is one in BÝ:





However, that's not a proper way to surf, so why not take a trip to Lofoten instead?




I demand an immediate retraction and apology!

LOL...comment withdrawn. Happy surfing! Is the surfing in the pool vs. surfing in Hawaii the equivalent to demo trading vs. live trading in the markets?

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  #104 (permalink)
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TI Anon View Post
No, I'm confident his spreadsheet is right.

The point I was trying to make (poorly it seems), is in this series of 14 trades, 1 trade (#5) was mainly responsible for the result. And, since the sample size was so small the results were of little, if any, practical value.

You commented about the series of posts of traders becoming frustrated, etc. and quitting in disgust. After years of seeing people come and go, one reasons stands out as the cause. They all start trading without understanding the task at hand by using the same type of education; after-the-fact and faulty statistical analysis by self promoted trainers. Successful trainers train, successful traders trade.

One of the most amazing things, never discussed, that contributes to the high failure rate is the large amount of effort put forth in training people how to "embrace losing". Brokers, trainers and even peers all do it. Brokers because they want to limit their liability. Trainers because they know their method doesn't work,(they used it and it didn't work for them-that's why they became trainers). And, peers because they have been brainwashed by the other two.

When the Chicago Bulls were interviewing Derek Rose, before drafting him, they asked what he didn't like most about playing basketball. He immediately responded, "I hate losing!", they knew at that moment they had a potential MVP. It's no wonder so many traders fail, when so many are teaching them to be "great losers". It is only possible to train "how to be a winner" when you have an actual winning strategy. Without one, you have to teach "how to be a good loser", or you'll soon be out of business.

(I know there is a good chance I'll be attacked for these comments. I'll only consider the attacks by long term profitable traders-with verifiable proof- to be of any consideration, what so ever. Comments by others will be treated in kind.)

That's all good except that I trade. I don't think anything made me a better trader than when I started backing people and started to discover the BS I was believing about myself and how I traded because I would be asked questions about it.

Your example on Derek Rose; whom I have met, is not anywhere near what happens in trading. Derek doesn't lose indefinitely after he throws the ball. The score doesn't keep dropping into the deep negatives until he takes position of the ball again after his last shot and does something with it. Hence, he doesn't have to "be a great loser".

If you don't take your losses in trading and get good at it, then you are just another guy "waiting for the market to turn" so that you can scratch the trade or make a tick. I cut my losses FAST. If it doesn't behave the way I expect, then I pull the trade and wait for the next setup.

In my experience, if a trader spends less time trying to be right and more time simply putting on the trade when the setup shows up and closing it when it doesn't work, they would be much better off any day of the week. Again, I watched guys struggle and my knowledge didn't come from a "training book". I paid dearly for what I'm sharing.

Thanks for your continuous questioning of anything and everything I'm doing though. It keeps things that I haven't looked at in a while fresh for me.

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  #105 (permalink)
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Big Mike View Post
No trader wants to lose money.

But if you take the Derrick Rose example, embracing losers or being a good loser would be equivalent to Derrick missing a lay up. If he flips out, loses control, throws out all his strengths of how to play good ball and just starts fouling everyone and hoarding the ball, missing shot after shot after shot, then he is going to have a problem.

He doesn't do this. He is a good loser when you equate a loss to a particular shot within the game. He keeps his cool and doesn't focus on the missed shot. No. He moves on to the next shot, because that is what matters.

Traders need to be a good loser in the terms they need to learn that missing a lay up is part of the game. It is not a big deal, so don't make it one. By being a good loser on these individual plays, or trades, then the game as a whole (trading session, day, week) can come out on top as a winner because you've remained in control and allowed your experience as a player prevail.

Mike

Much better put than what I said. If he changes his shooting technique because he missed a free throw, he would put himself through a new learning curve and a heck of a lot of frustration (which many ppl who trade on a retail level do).

If he misses a free throw, it may be the biggest of the game, then he doesn't celebrate it. He doesn't like doing it, but he can't carry that to the next game and the next free throw. That is what I'm calling "being a great loser". You just let it go and move on and stick to your plan. That is my point.

TI Anonymous takes my words to mean that you should just lose and be happy about it. I am not happy to lose on a trade regardless of the size I have on. That is not my goal.

I feel like no matter what is said and how it is said and how many examples, analogies, references or whatever is used, some people will take the most negative connotation and possibility of doubt and emphasize THAT. Which to me is interesting, given how many traders have come to me over the years and have received my full attention and help for no return whatsoever. I believe in Karma and I love to trade and I love to teach and change lives. This is why I followed the prop route and later, when I stopped backing people, I decided to just continue honing those skills online for whomever wanted to listen.

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  #106 (permalink)
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omni72 View Post
Seemed to work pretty well for this guy:


I don't recognize the guy in the video. Who is he??? A failure I'm sure because all he talks about is how much he loses.

I have watched that video at least a few hundred times over the years and have posted it on my twitter thread several times. Love it!

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  #107 (permalink)
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Private Banker View Post
Thanks for sharing that link. I think this is a good example of what traders should not do as FT71 refers to a few times. I'm not too familiar with FT71 and these are only my opinions of course. However, I've been trading for a long time and have managed millions of dollars in client and proprietary capital and know what makes sense and what does not. I think in the example provided in the link, it shows how one can get out of trouble while being biased on a direction.

I think it's extremely important to do one's "homework" so that they are prepared going into each day's trading session however, it is extremely important to remain open minded. You can have a "slight" bias on direction but I think it's more important to recognize and change what the order flow is telling you. By looking at the chart provided on how the day turned out, you were trying to swim against the current all day. Had you watched the open and order flow, there clearly was downward pressure on the market. Establishing a short position off vwap and cycling through positions on retracements and thrusts back into trend would've resulted in far more of a profit while taking risk off as the trend developed further. Remember, previous areas of support are often tested and when they're blown through, the market can reward you big time. Same goes for areas of resistance.

I understand the point of the description given but I think this was a case of being overly biased on direction and being lucky enough to have caught that first retracement higher which was the majority of the overall return in the trade(s). So, my point here is don't fight the order flow!

Anyway, I realize hindsight is 20/20 and it's easy to sit here and rip through a chart. My intentions for showing this are not sanctimonious in any way and are simply to emphasize that while it's important to have a game plan, you need to be open to adapting to what the order flow is telling you (sorry for being repetitive but I really want to drive that home). The chart below provides an alternative view which shows what I'm referring to based on what is happening TODAY. High and low volume nodes are important to watch as we can see how the market accepted and rejected price in the past however, the market is constantly changing and what was in in the past, may not be the case tomorrow which is why it is extremely important to remain open minded and trade what your screens are telling you.

I mean no disrespect to FT71 as I'm sure he is an excellent trader/teacher or whatever and this is an example of just one day but I had to step in here as opinions vary. I guess this makes the market move as people have different ideas on what is happening or will happen based on their trade set ups, etc.

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Cheers,
PB

Very constructive post and thanks for that. No offense taken and I welcome this opinion.

One thing that is missing here is that I think you are assuming that I'm fading the trend all day. I trade both sides of a move as long as the trade is taken in my "areas to do business" (homework). This isn't for everyone not is scaling out of trades. I am simply sharing what works for me and it is based on day-in-day-out refinement for years of trading.

Thanks for posting your view on that day!

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  #108 (permalink)
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monpere View Post
In terms of trade management, my experience has been that 'all in/all out' has always proven to be superior. I believe most average traders like scaling out because it makes them feel good. That in itself may be a valid reason to do it, but it generally does not perform better.

...

Fair enough...I prefer all-in/scale-out for most of my trades and scale-in/scale-out on major areas of interest; but that is a rare occurrence. The reason I am all-in/scale-out is because I know myself and will do what it takes to gain full perspective on the trade by reducing risk whenever possible. You can run statistics on it and so on, but I know that I'm much better in a scaling approach than all-in/all-out. I will be the first to say that I would suck at trading a 1-lot.

However, your definition of "losing trade" is not quite accurate. As I show in that coin-toss example sheet, it is a small sample in this case but the probability of hitting a full stop versus scaling out and then using those profits to offset the stop are very evident in my live trading. Many people don't see the logic in this mathematically, but it is quite simple.

Also, I often use my theoretical average as an "uncle point" and so the damage is not significant AS LONG AS I get my first scale on the trade (which happens very often). This subject is actually very enlightening but too much to write about here.

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  #109 (permalink)
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FuturesTrader71 View Post
Very constructive post and thanks for that. No offense taken and I welcome this opinion.

One thing that is missing here is that I think you are assuming that I'm fading the trend all day. I trade both sides of a move as long as the trade is taken in my "areas to do business" (homework). This isn't for everyone not is scaling out of trades. I am simply sharing what works for me and it is based on day-in-day-out refinement for years of trading.

Thanks for posting your view on that day!

Thanks, I was just going off of the link that was provided which had an example of multiple long entries that were on a spread sheet that occurred on a down trend day. Of course, we don't know what kind of day will develop based off of the open. All we can do is pay attention to the levels of significance and trade from there. As I mentioned, clearly this is just one day of trading and know it's completely impossible to comprehend a trader's preference/strategy and I'm sure you know what was occurring that day and would probably be thinking similar to I. My intent in providing that commentary was simply an alternative view on how things were unfolding relative to the trading that occurred per the spread sheet. No one was more right than the other. At the end of the day, we all walked away profitable. That's the beauty of trading...

Cheers,
PB

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  #110 (permalink)
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Private Banker View Post
Thanks, I was just going off of the link that was provided which had an example of multiple long entries that were on a spread sheet that occurred on a down trend day. Of course, we don't know what kind of day will develop based off of the open. All we can do is pay attention to the levels of significance and trade from there. As I mentioned, clearly this is just one day of trading and know it's completely impossible to comprehend a trader's preference/strategy and I'm sure you know what was occurring that day and would probably be thinking similar to I. My intent in providing that commentary was simply an alternative view on how things were unfolding relative to the trading that occurred per the spread sheet. No one was more right than the other. At the end of the day, we all walked away profitable. That's the beauty of trading...

Cheers,
PB

Can you really rely on volume profile analysis in hindsight? Isn't it possible and likely that the volume profile as it looks on a historical chart, looked very different in the middle of the day while the profile was developing?

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