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Targets + Stops
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Targets + Stops

  #11 (permalink)
Just starting out...
Melbourne, Australia
 
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I like to trade an odd number of contacts and have 2 Price Targets and a 8 tick Stop.
The 1st target @ +8 ticks second @ +16 Ticks.
If I'm trading 5 contacts then 3 come off at the 1st target and my stop is moved to B/E
If the market keeps moving in my favor than my stop moves up to +2 Ticks @ +10 and another 2 for every 2tick higher move.
If the market hits my +16tick target then I'm done for the day.
If the market takes me out @ B/E, +2 or +4 than the next trade I go in with 3 contacts.
This reduces my risk and if the second trade hits the stop then I'm net 0 after that trade.
Also if I have 2 full stops in a row than I'm head is not right and I'm out for the day.
No point in giving the market anymore of my hard earn $$$$.

-D4

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  #12 (permalink)
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Hello -D4-,

did you program this into ATM or as a conventionally coded strategy?

sounds like parts of my trading plan, hope it works well.

Kirk

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  #13 (permalink)
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What matters


Hi guys.

I watched the video that Mike posted about psyc and money management. It felt like I was in a boxing ring and at the end of it this was me - . It is a very hard message but one that is 100% true.

It is sometimes amazing how we look to find the answers in all the wrong places. Like Mike said when we lose money it is not our broker, the indicators or anything else; it is us.

As for me - I'm ordering my copy of Trading for a living ....

I also thought to share a little bit of how I trade ...
I am still a smaller trader currently trading the Es two contracts at a time.
First profit 4ticks, second 6ticks. Initial stop at 5 ticks. When pt1 is hit I move the stop to 1 tick below BE.

This way I maintain the 1:1 risk/reward ratio. The one thing that I do have to fight is the urge to overtrade , and for smaller traders this is difficult because it feels like you can justify the overtrading because "you need to make money"

Anyway for now thats my 2cents worth. If you guys have any ideas/advice for smaller traders please share.

Take care

Mick

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  #14 (permalink)
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I think there should be no fixed stop and target rules.
i trade on 4 or 8 range (depending on volatility) set a stop order on a high (long) or low (short) of a bar with my rules. i use an atm with 8 ticks and flexi target (for price action) and a stop loss with 8 ticks (optional). this is when i only trade the move ... the position is filled i set my stop on the high of the current bar for short and low for long ... the price target goes manuelly ...
now i set a trail stop on low or high for each current bar real or in mind. the market will stop me out. depending on market situation, i have big winners and small loser. the problem is i have no ratio ... and it comes to overtrading. and small losers win and take my money. the key is discipline. which I have not yet

i think that is Scalping or trading. i do not know. i have played with strong stopp and target but this works for me better ...
i can live while money and account management save me. i have three acc. one for live one trade for a day ... one for to be rich which is the most time down (no discipline) and the sim acc. for playing ...

wh


Last edited by wh; July 19th, 2009 at 11:32 AM.
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  #15 (permalink)
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zeller4 View Post
Hello -D4-,

did you program this into ATM or as a conventionally coded strategy?

sounds like parts of my trading plan, hope it works well.

Kirk

Hi Kirk

I trade with Infinity AT and the move to B/E is auto than I like to manually move the stop higher after that.
I could set the DOM to move my stop higher with a trailing stop.

-D4

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  #16 (permalink)
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Mick,Have you received your copy of Trading for a Living yet? How do you like it so far.

Everyone, this thread is a very important one and I really enjoy these discussions. In the past I have set my stops based on ATR multipliers, indicators like ATRtrailing and many others, swing hi/lo and more. Recently I have been using a fixed stop because I am using a multi-target fixed target system where each target comes off at a set price.

I would imagine those of you using a varying stop based on something like ATR or swing hi/lo are also using a varying target. I am wondering if you are maintaining a w/l ratio of greater than 1 with this method? I like to have the first and second target come off to secure my position and not give back ticks then the third target (or more) grows much wider as a runner.

I do not average down or average up. I do scale out. My first target is about 50% of my stop, my second target is about 100% of my stop and the runner is 200% or bigger. My goal is 70-75% accuracy with a w/l ratio of > 1.

"Let us be thankful for the fools. But for them the rest of us could not succeed." - Mark Twain

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  #17 (permalink)
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step by step i get more interested in these MM / RM things.
i am no backtester i as sayed yet - so there is no experience about this at all.
i ask from my state of knowing nothing about optimizing + stuff.

is it possible to optimize a conditionset in the direction of Stops + targets ?
i dont want to play with indicator-parameters, only with MM / RM.

Has anyone a kind of a "shell-strategy" that is easy to use for backtesting or an optimizer
where i just can put my conditions in ?
i like to test this with FESX in tickcharts - fix rules (maybe a simple crossover-strategy) and want to play with varitions at Stops / TrailStop / Targets.
As i am new in this - i am neutral so far -absolutily openminded to whats coming out of this.

i will do it in a thread, so we all can watch + discuss this.
What do i need else ?
in Ninja we have backfill-data , what do i feed an optimizer with ?
wichone i shopuld take ?
is there anyone who likes to do this in cooperation ?

looking forward to whats coming up !

max-td
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  #18 (permalink)
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max-td View Post
hi,
just read about the discusions how big a StoppLoss - SL - is allowed to be in ratio to the targets. Lets collect some ideas here !

in my trading i always have bigger SLs than targets - and it works !
there are lots of people (trader and also socalled gurus) out there who pray you only can survive with small SL and big targets - i tried it a long time like this -- and always failed.
I am shure that its also depending on the tradingstyle/setup, but saying it does always kill you, i dont think thats true.


"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat." - P64 "HOW WE DECIDE"


What I realized was all conventional trading wisdom is "wrong".

I have distilled trading into the following:

ALL YOU NEED TO KNOW ABOUT TRADING
  • Price either goes up or down.
  • No one knows what will happen next.
  • Keep losses small and let winners run.
  • POSITION SIZE = RISK / STOP LOSS
  • The reason you entered has no bearing on the outcome of your trade.
  • You can control the size of your loss (skill) but you can't control the size of your win (luck).
  • You need to know when to pick up your chips and cash them in.
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)



You can not control the probabilities of wining or losing.


You can not control your average win size.


The only part of the equation that you can control is your average loss size.


Last edited by TheRumpledOne; September 6th, 2009 at 02:36 PM.
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  #19 (permalink)
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Here is something you can play with. It is a strategy that allows you to Optimize based on Stop Loss and Profit Target. It uses two contracts... one takes the target and the other is a "runner" with a trailing stop loss.

Nothing fancy here, its based on code from the Ninja Support site (SampleScaleOut I think).

Some things I learned: In a clear bull or bear market... buy and hold with a very wide stop usually wins. You have only a single trade for the life of the contract. You need to use realistic stops/targets based on your risk rules (ie if your rules say risk no more than $500 on a single trade that may dictate your stop size and trading timeframe).

Please play around with this and share your thoughts. Also feel free to modify and post it back... perhaps the stops tighten the further into profit you get, for example, or tie the stop/target values to an indicator (VIX, ATR, lunar cycles, whatever).

All good weekend fun!

Attached Files
Register to download File Type: zip StopTargetOptimizer2Contract.zip (1.6 KB, 42 views)
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  #20 (permalink)
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Attached a Strategy Analyzer report of a strat optimized on Stop and Target (the code is basically the same as the strat posted above but with different entry rules).

This is using 30 days of tick data on the ZN. While trades were only profitable 45% of the time, it has a positive expectancy when using a 9 point stop and a 12 point target.

I'm obviously not going to run out and throw money at this strategy based on this optimization, but it does give me some ideas for further testing.

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Targets + Stops-strat-analyzer.jpg  
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