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Going Beyond Psychology to make Winning Trades and Nice Profits
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Going Beyond Psychology to make Winning Trades and Nice Profits

  #111 (permalink)
Elite Member
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rtrade View Post
If these traders are ringers (professional traders) then they have no business in a sim trading contest...just my opinion.

Comment: There again the sim traders will be up against them for real one day.

I'm not a pro but I've been training for a professional trading contest and should be entering it soon.

Question: What is this one?

What is this E-Ratio?

Answer: MFE/MAE = E-Ratio (E = Edge, not a common calculation from what I can see)I consider it a very important risk feedback figure. If I look at any trading figures it is the first thing I calculate. Tells me where the trader has been to get the profit. Often way down in a heat of hell. MAE = $80 MFE = $320 E-Ratio = 4.00. This in my books is excellent. Basically low MAE/ high MFE, which means cut losses/let profits run. lol.


You don't mind, what is this sim trading contest? Who sponsors it? Is it held every month? Who can participate?

A UK forex spreadbetting company called Alpari. Never heard of them before yesterday. It is spread trading so not suitable for USA traders I understand.

Shivaya

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  #112 (permalink)
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Competing

I have studied a two traders who have won competitions. Larry Williams and Marty Schwartz. Larry turned $10,000 into $1.1million in a year in the 1980's and then built a book/seminar business on the back of this.

He actually published all his statements online once to shut up the non-believers and I copied them down and put them into my money management program. He had a 78% drawdown and always experienced a 50% drawdown every month. So he was a massive risk taker. He actually had over $2 million but took a big loss just at the end!

Marty is also a wild trader, possessed and made more profits than all the others combined. He entered the comp to be the best and beat everyone. It sort of fired him up. He wrote The Pit Bull Trader.

These guys in a comp had a devil may care attitude and took huge risks that got many people into trading who soon realized what the 'feeling' of a futures contact meant.

Then came the ZenTrader. An approach where we still compete but sorta sweeter. As I studied risk and what I felt was my tolerance level I soon realized how much heat I could take on a trade of conviction. So I looked for the sweetest way to trade my convictions and finally found the sweet spot in both consciousness and entries.

Finally I found a formula to let me know if I was succeeding. The E-Ratio. MFE/MAE. When I keep this above 2.50 all is sweet!

Shivaya

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  #113 (permalink)
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The Sweet E-Ratio


A quick way to know if you are really 'In the Sweet Spot' in your trading is to constantly monitor your own E-ratio. Ninja does not calculate this, but may soon I hope. I actually helped Ray at Ninja many years ago get the performance analysis section with a few ideas.

My focus on keeping a healthy E-Ratio keeps me in a sweet state and shows me if I am succeeding. When you have a good E-Ratio you will always feel good in your trading.

Just divide the MFE figure by the MAE figure to get your E-Ratio. If it is over 2.00 good. If you let a trade go beyond your stop and it comes back to give you a small profit, it will show up in your E-Ratio(and spoil your figures...tut...tut). So the profit made is not the full story. What was the journey of each trade? E-Ratio tells you.

I calculate it for day, week and month and year.

I have attached an example from Ninja.

Shivaya

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  #114 (permalink)
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Shivaya View Post
A quick way to know if you are really 'In the Sweet Spot' in your trading is to constantly monitor your own E-ratio. Ninja does not calculate this, but may soon I hope. I actually helped Ray at Ninja many years ago get the performance analysis section with a few ideas.

My focus on keeping a healthy E-Ratio keeps me in a sweet state and shows me if I am succeeding. When you have a good E-Ratio you will always feel good in your trading.

Just divide the MFE figure by the MAE figure to get your E-Ratio. If it is over 2.00 good. If you let a trade go beyond your stop and it comes back to give you a small profit, it will show up in your E-Ratio(and spoil your figures...tut...tut). So the profit made is not the full story. What was the journey of each trade? E-Ratio tells you.

I calculate it for day, week and month and year.

I have attached an example from Ninja.

Shivaya

If your E-Ratio goes below 2, what do you do to raise it?

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  #115 (permalink)
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monpere View Post
If your E-Ratio goes below 2, what do you do to raise it?

When I was working my way through this exact question in my own trading through trial and error I saw that I had to work on letting more trades run. Catching some really big winners does wonders for the E-Ratio.

To achieve this I use simple swing stops that give the market room to wiggle. In addition I developed the skill of 'adding to a winner'.

I could see I was able to find the trade but needed to stay with the move. I worked on stop management to achieve this.

By actually focusing and constantly calculating my e-ratio every day I began to notice the trades that 'killed' it and the trades that 'enhanced' it.

I also noticed some pro traders from Chicago used the terms on twitter MAE 2 ticks for gain of +3 points. In other words he was able to get in with only 2 ticks of heat. I'm unable to do that but it built a powerful message of how important it is.

Shivaya

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  #116 (permalink)
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3 Golf Major Champions from tiny Northern Ireland

OK, here are some classic examples of 'sweet no-think'

We have a population of some 1.8 million people. Three of our men have recently won 3 of the last 6 golf majors.

Darren Clarke just won the British Open on Sunday. Rory McIlroy won the US Open and Graeme McDowell won it a year ago. Here are a few secrets to Darren's success on Sunday.

A BBC reporter interviewed Bob Rotella a sports psychologist.The conversation went something like this.


BBC: What did you say to Darren?

BR: We talked about his attitude and his putting. We got him to go 'unconscious' with his putting.

BBC: Unconscious?

BR: Yes, look where you want it to go and hit it.

BBC: Doesn't mean to say he didn't miss one or two though?

BR: Oh well, I mean if you had to make them all in order to do it you'd never stick at anything. All we want to do is make every putt in his mind. I don't want you to be afraid of it. I don't want you to worry about running them by the hole. Darren, you're talented. Trust that your talented. That's sports.


...and that too is trading in the sweet spot!

Shivaya

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  #117 (permalink)
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Good stuff S.

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  #118 (permalink)
Shri
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That's a wonderful example Shivaya
There is lot of experience which is seen in each and every post of you
Keep the posts rolling

The greatest danger for most of us is not that our aim too high and we miss it,
but that it is too low and we reach it.
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  #119 (permalink)
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Shivaya View Post
Winning Trades...Nice Profits...That's it really!

Hi Shivaya,
I repeated these phrases several times in my trading over the last few days. It has been extremely helpful. I especially notice a confidence boost saying this when I am 2/3 of the way to my target and considering exiting early.
Much Thanks!
westsider


Last edited by westsider; October 13th, 2011 at 01:15 PM.
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