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The PandaWarrior Chronicles
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The PandaWarrior Chronicles

  #551 (permalink)
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Today is simply an experiment....and I suspect I will take @bobarian advice and sim next week. I will make that decision over the weekend but overall I am happy with the net result.....

It could have been better managed to be sure, and I could have done a better job with my entries I think but it turned out well. To be sure, I THINK I could have done the same thing in terms of net profit by being all in all out at 10 ticks, but what the runners did was help make up for stupid trades and I think they will in the future.

I'll have some more thoughts about what I was thinking a bit later on but I am tired now and want to rest for a while and think about the day.....

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Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #552 (permalink)
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supertrend example

Here's an example of why a mechanical stop system (such as supertrend) often works better FOR ME than discretion... You are likely better than me at choosing a good place to get out so it might not give you as much of a benefit.

I bought CL on a break of bar top and had planned on using the supertrend to tell me when to close. I chickened out when two bars closed down and closed the trade. Obviously this is completely anecdotal but supertrend usually does a good job at keeping me in trades until they stop working...

I closed at about 109.60 and the ST would have had me close at 109.75.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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  #553 (permalink)
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Surly View Post
Here's an example of why a mechanical stop system (such as supertrend) often works better FOR ME than discretion... You are likely better than me at choosing a good place to get out so it might not give you as much of a benefit.

I bought CL on a break of bar top and had planned on using the supertrend to tell me when to close. I chickened out when two bars closed down and closed the trade. Obviously this is completely anecdotal but supertrend usually does a good job at keeping me in trades until they stop working...

I closed at about 109.60 and the ST would have had me close at 109.75.

While I understand the supertrend, ( I've used it extensively on range charts and even created a trading method using two of them set to different ATR settings....the idea was to trade when they were in agreement) I am trying to read price action better, set targets based on swings or other S/R. Further, the least indicators I have the better. I am starting to really like clean charts.

My charts get really cluttered throughout the day with trend lines and other markings and adding another item will just make it worse.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #554 (permalink)
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PandaWarrior View Post
So I keep my average loser pretty constant in terms of ticks, so if i can get my average winner to be 2-3X or even perhaps have a 4-5x winner once in a while, then it should be viable long term.

This may be a more difficult goal than it seems. I've experimented with a similar "runner" strategy but could never get it to work because the risk:reward is inherently skewed.

Let's say that 10 ticks is one unit. If you take a trade with this style, you start with 2 contracts. Each time you are stopped out for 10 ticks, you therefore lose 2 units. Your average winner will need to be substantially larger than 2 units to be profitable long term.

The problem is that the successful runner trades will be larger than two units, but the average may be surprisingly lower. It depends on how often you take a small win, then break even or take a loss on the second contract. In practice I've tended to find that all my losers are 2 units while half or more of my winners are 1 unit. The math works against you if that's the case.

Then it's doubly exasperating when you get a good runner to work, but then realize that since this was effectively a half sized trade it doesn't help as much as it feels like it should. One 60 tick runner for instance only offsets three ten tick losers.

The weak link in the chain in my opinion is the small target on the first contract. The larger you can make the first target, the better off you'll be. A 20 tick first target might be a starting point if the stop is 10 ticks. Just my experience anyway, but I agree with whoever posted earlier that you should test this out in sim first. Good luck!

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  #555 (permalink)
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worldwary View Post
This may be a more difficult goal than it seems. I've experimented with a similar "runner" strategy but could never get it to work because the risk:reward is inherently skewed.

Let's say that 10 ticks is one unit. If you take a trade with this style, you start with 2 contracts. Each time you are stopped out for 10 ticks, you therefore lose 2 units. Your average winner will need to be substantially larger than 2 units to be profitable long term.

The problem is that the successful runner trades will be larger than two units, but the average may be surprisingly lower. It depends on how often you take a small win, then break even or take a loss on the second contract. In practice I've tended to find that all my losers are 2 units while half or more of my winners are 1 unit. The math works against you if that's the case.

Then it's doubly exasperating when you get a good runner to work, but then realize that since this was effectively a half sized trade it doesn't help as much as it feels like it should. One 60 tick runner for instance only offsets three ten tick losers.

The weak link in the chain in my opinion is the small target on the first contract. The larger you can make the first target, the better off you'll be. A 20 tick first target might be a starting point if the stop is 10 ticks. Just my experience anyway, but I agree with whoever posted earlier that you should test this out in sim first. Good luck!

The math is definitely in favor of all in all out with whatever target you choose. But the emotions are against that. After reading your post earlier today, I started thinking about scaling in as opposed to scaling out. I like that idea more but again, due to the intense emotional desire to be risk free early in a trade, scaling out makes more sense emotionally.

Now @tigertrader will say that this not doing what is in my own best interest and he is probably right.....however, it felt good on Friday do it like that and I will give it a serious run before I pass judgement. I have used runners before and to be honest, I did well with it but gave it up when I thought I could make the same money scalping AIAO......but over the last few months, I've discovered I am only slightly better than break even scalping. This could be a patience issue, a method issue or something else I am not aware of.

So if I can make the same money with runners as I can with scalping but reduce the number of entries and therefore the number of times I place myself at risk of being wrong, i think thats a good thing...

I guess we will see next week.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #556 (permalink)
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worldwary View Post
This may be a more difficult goal than it seems. I've experimented with a similar "runner" strategy but could never get it to work because the risk:reward is inherently skewed.

Let's say that 10 ticks is one unit. If you take a trade with this style, you start with 2 contracts. Each time you are stopped out for 10 ticks, you therefore lose 2 units. Your average winner will need to be substantially larger than 2 units to be profitable long term.

The problem is that the successful runner trades will be larger than two units, but the average may be surprisingly lower. It depends on how often you take a small win, then break even or take a loss on the second contract. In practice I've tended to find that all my losers are 2 units while half or more of my winners are 1 unit. The math works against you if that's the case.

Then it's doubly exasperating when you get a good runner to work, but then realize that since this was effectively a half sized trade it doesn't help as much as it feels like it should. One 60 tick runner for instance only offsets three ten tick losers.

The weak link in the chain in my opinion is the small target on the first contract. The larger you can make the first target, the better off you'll be. A 20 tick first target might be a starting point if the stop is 10 ticks. Just my experience anyway, but I agree with whoever posted earlier that you should test this out in sim first. Good luck!

I totally get what you are saying here. I've had this conversation with myself and with my trading buddies more than once.

However, what you said about a 60 tick winner only offsets three ten tick losers is important. It does in fact, offset those losers.....you buy yourself three losers with one winner vs every stop out needing two winners to be net +10 units.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #557 (permalink)
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here is an interesting thought.Lets say we have a takable entry , and the swing gives us a 15 tick sl.Now , the trade goes against us.Lets say the swing is a decent sup or res, that we believe should hold.Now the trade is 3 ticks from stopping us.Does it make sense to take a cheap add here?The 2nd contract will have a 3 tick risk, as we will observe the stop, and not move it.When a trade goes against me, and gets close to my sl, i go into damage control mode.Typically, we will get a bounce, before price breaks down, and this could be a simple way to just get a few ticks(say, 6 or 7), before itstops us out.Sometimes , the swing pivot will hold, and , the original trade works, and we got those extra ticks, at a much better value...or, the trade fails all together, and the 2nd entry is not a full stop.Just a thought..

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  #558 (permalink)
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bobarian View Post
here is an interesting thought.Lets say we have a takable entry , and the swing gives us a 15 tick sl.Now , the trade goes against us.Lets say the swing is a decent sup or res, that we believe should hold.Now the trade is 3 ticks from stopping us.Does it make sense to take a cheap add here?The 2nd contract will have a 3 tick risk, as we will observe the stop, and not move it.When a trade goes against me, and gets close to my sl, i go into damage control mode.Typically, we will get a bounce, before price breaks down, and this could be a simple way to just get a few ticks(say, 6 or 7), before itstops us out.Sometimes , the swing pivot will hold, and , the original trade works, and we got those extra ticks, at a much better value...or, the trade fails all together, and the 2nd entry is not a full stop.Just a thought..



Wow... balls of steel... but, brilliant!!! I'll try it


AJ
Nashville, Tennessee


"Life On The Edge of SR"
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  #559 (permalink)
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PandaWarrior View Post
The math is definitely in favor of all in all out with whatever target you choose.....

That was what I read long time ago. A trader after many years of trading and many permutations came to that conclusion.

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  #560 (permalink)
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cory View Post
That was what I read long time ago. A trader after many years of trading and many permutations came to that conclusion.

i agree with that..and the good thing, is we can pick a target that we feel should be a realistic reliable target.In the past, i recall you would typically go for 16.Now, it seems more like 10...whatever, it doesnt matter.The premise, is to take 4-8 high probability entries(that you are most confident in)and take your shot...With that said, the work really is done.Now, if you average 20 to 40 ticks with this a day, that is fine....down the road, when youre happy with the results, and the consistency is there, set aside say,$2000.At that point, go to 2 contracts , and dont change a thing...and so on.This eliminates the mental baggage of caring about runners.If we knew when the runners were going to happen, we would all be rich...I dont know when runners are going to happen.If you should have a setback and draw down 2k, go back to 1 contract and start over.When i see Al Brooks, Mack from Pat, and others looking for 4 ticks on the es(a whole different animal)it tells me 2 things..First, they want winners.2nd, they trade big size...and if youre trading 3 contracts on the cl and you want to let the 3rd contract go, no biggie...But im willing to bet, that your dependable paycheck will be from your tried and true method, and a runner here and there will just be a nice gift.As the cl changes through cycles, you might find that it is giving 10-16 consistently, or 8-10, or whatever.We all know if we keep changing atm strategies, goals, sl, etc, we typically get frustrated...So i say, end the frustration, and simplify.And decide what $ amount makes you happy.I think your method has done well for you, and also kept you safe.The cl is trying to get you to change that.( i really believe this)so i say, pick a target/sl, and stick to your guns...the month end is the ultimate answer...we wont be profitable every day, and , thats fine..we cant beat ourselves up too much, because its not productive.I really believe if you do this, you will be less attached to outcomes, and just work ...and if you havent allready, find a way to relax outside of trading..I find the answers to our biggest questions tend to be realized when we are away from the computer, and not stressed.Its all mental, and we know that..

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