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"Easiest" performance metrics to achieve?


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"Easiest" performance metrics to achieve?

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  #1 (permalink)
Golden Bay, New Zealand
 
Experience: Beginner
Platform: Sierra Chart
Trading: ES, NQ
 
Posts: 186 since May 2012
Thanks: 846 given, 334 received

Firstly, the title of the thread is not meant to imply this is "easy", only that some paths are easier than others.

I have two questions:-

1. What type of setup do you believe is easier to develop/discover?

Assume both have the same biggish size stop, both use 1 contract (same risk) and only 1 trade a day.
a. R:R of 1 with a win% of 60%
b. R:R of 3 with a win% of 30%

Both end up with the same net profit - but likely require different methods to get there.

With "A" you will probably use one market and be flat at the end of the day. With "B" you would likely hold the winners multiple days, and probably be looking at multiple markets to find the trigger.

2. Which of the above do you believe to be the better metrics to aim for if you remove the same size stop, 1 contract and 1 trade a day restrictions?

Actually, there are sort of restrictions in that the risk has to still be similar and within account size tolerances. Stop size would/could vary however based on the prevailing market conditions

Pro's of "A" as far as I can see.
1. The higher win rate will have a smoother equity curve - which is probably easier on the mind.
2. It will have a lower std dev of returns so you can probably risk more.
3. As you are trading one market you will know it more 'intimately'. It might therefore be easier to find an additional system or refine the current.
4. You'd likely go all-in-all-out and be involved less in trade management - perhaps easier on the mind, and free up time for research (or looking for 2nd / 3rd entries)

Pro's of "B" as far as I can see.
1. More room to move in improving win% over A, with each %gain resulting in more profit. (I don't know if a 1% gain in "B" would be easier or the same to find as a 1% gain in "A")
2. Involved more in trade mgmt (to let the winners run), and the experience gained here could improve profit over time.
3. Potentially the entry timing wouldn't need to be as refined (as you'd probably have a bigger stop), and so you might not need to be as glued to the screen as you would in "A". This would free up time for research.

I'm trying to decide on the 'best' direction to focus my efforts. I've moved away from the idea of small stops due to the transaction costs (thanks to @djkiwi for his s/sheet) - for some it's a viable method they make it work - and that's great. But I want to get the most with the smallest effort. By that I mean working smart, rather than being lazy.

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November 29, 2013


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