My respect is mutual . What you need to consider is that a trade taken with a potential reward of 8 ticks and a stop of 8 ticks is generally considered 1/1 RR . There is nothing assuring you that you will capture 8 ticks profit , therefore if the true risk turned out to be 3 ticks then to me it justified exiting with 3 ticks profit . if you enter that same trade with a 3 tick stop you will probably get stopped out and price will then go in your favor.
Therefore if you accept the 8 tick stop you will substantially increase the average loss and do nothing for your bottom line . Besides , if I am confronted with a reversal signal why would I wait to get stopped out before reversing or standing aside ?
Blz - I've found that 5 min candles often reverse after 4 minutes. I just got suckered out of a trade on euro for the exact same reason. see my chart. I did manage to get 2 nice moves out earlier today though. While I was at work too!
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If you trade with the professionals then they will be defending your stop because they know all the stops are there and they want to move price in the opposite direction. This is where HVC comes in. HVC is the pro's defending their entry and trying to protect the stops underneath.
Stops are ran a lot less in stocks. More in CL than ES. The other day I saw my stop run twice on YM and on the ES chart the stop wasn't hit. So I switched back to ES. Could have been a fluke (2 times out of how many thousands) but I don't want to trade any market that routinely runs stops..
You said you entered with 8 ticks top. Your MAE was 3 ticks. But your risk was 8 ticks. You're confusing the two. If you take profit at 3 then you just risked 8 to make 3. That is not good, cause only 1 loss will wipe out 3 winners. So your win rate has to be above 75%. that's really hard to do.
Personally, I put my stop out of the way and I shoot for a target = to stop. If price action doesn't look good then I bail, whether I have an open profit or loss. My goal is to cut my losers shorter than my winners and have an avg win / avg loss > 1.0 so that I can be profitable less than 50% of the time.
Everyone has to do what works for them so I don't criticize anyone who uses an inverted ratio. You can be successful like that. I just wasn't successful like that.
Precisely , if you open a trade with an 8 tick stop to have it out of the way and price goes against you 3 ticks then goes toward profitting more than 3 ticks then stops you out for -8 ticks dont you think the TRUE RISK was only 3 ticks and you passed up a 1/1 opportunity ?
Say for example that same trade went against you 7 ticks and you bailed out with a 3 tick profit arent you initially risking more than the TRUE risk but captured a less than 1/1 RR ?
Just food for thought here , I respect everyones abilities but do find stops and targets and ratios and justification a slippery slope . If a win is better than a loser then why do I ( and I bet most of us ) have a hard time getting a handle on taking profits and feeling good about not losing ?
3 tick target 5 tick stop. I let my stop hit every time, as you will see when you study the chart you have to let ZN breathe with these dots because a couple times it went down 2 or 3 ticks before hitting the 3 tick target. 6 winners 3 losers. All in the morning session for ZN, entering every dot that came up with a market order. Interestingly enough, on the three stop outs, the dots disapeared after the fact but showed up initially. That is why you will see no dots where the stops got hit. As you can see we are still working on this so its better that everyone waits... Thanks for your patience. This is all Sharky's concept we are just posting our results with his indicators and making changes as he sees fit.
P.S. I didn't trade the last dot because Sharky, Jeff and I were talking about all the other trades and conferencing.
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