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for me its more a question of liquidity risk, than what you mention above-
in any event,
it all boils down to what affords me the best chance to make the most money, whether it is the strategy i employ or the instruments i trade
and that is contingent upon my interpretation of market structure, the current theme, news, & price drivers and how inter-market relationships are affected
I thought about you today with the first big bear breakout. Once I placed my trade I asked myself, 'I wonder if Panda is in at the moment!'. Nice to see you were successful today! If I can keep my same pace I will go live on M6E in Feb.
I continue to be surprised by how often I get it right in terms of the intraday analysis and get it completely wrong on time frames higher than an hour.
Today I reduced my trigger chart and added two higher time frames for decision making. All I'm interested in is finding the level and then finding a low risk entry point.
I added to my CL trade today. I ended up having to close early but the add was perfect and I was able to hold it for a bit....interestingly enough, I was able to have a blended risk on two lots less than I took on the first lot. It worked brilliantly. I'll be doing it a lot more.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
@tigertrader, do you backtest the same strategy on different instruments? If so, would you only trade that strategy if it produced a tradeable edge across all instruments? Say it shows a good edge in one, but only a slight edge in others - would you discount that strategy entirely, trade only the one where you had the probabilities on your side, or occasionally trade the so-so instrument if the relative strength, market themes, market structure and news seemed to line up?
How do you implement liquidity risk in your decision making? Do you backtest it as part of strategy development so you know that poor liquidity lowers expectancy for that particular strategy, or is it a general/global rule - i.e liquidity is no good here so I'll take no trades until it improves?
As I understand your last sentence, you use these as global filters - i.e - these elements look good, so I'll trade one of my strategies in this instrument if an opportunity arises, or, they look bad, so I won't consider an opportunity even if it arises. So when you deploy a new strategy for the first time there are no final hard probabilities, but rather an assumption that if the elements look bad it will adversely affect the trade. You can of course compare the hard back tested results against the actual trades over time to give you the confidence that you are doing the right thing - and this then gives you the adjusted probabilities to rely on.
I'm so caught up in mechanical hard probabilities that I'm having a hard time freeing up my mind to comprehend how other elements fit into the picture. I appreciate and want to thank you for your posts and the thoughts they have generated.
NQ won by 1 tick....the Globex was pretty robust and there were a couple of trades I was quite clearly pre market but I was busy getting ready to leave the house for a parent teacher conference and so had limited time early on.
The BO trade worked by one tick. Had I gotten filled one tick worse, it would have been a loser.....but thats the way the ball bounces sometimes....exactly 40 ticks from my entry price....
On CL, +/+ today....I had a couple of small losers early trying to get in long...even though I was once again short biased as the daily looks poised for a pull back of sorts....proving once again I often get the daily wrong but the intra day right...go figure....Anyway, finished with 35 ticks....
I took a couple of deep pull back trades today as well....not used to this so closed them early...shame, those were pretty big winners......not counting those in the total......
some different looking trades on here for me.....I am experimenting with these kinds of trades...they are pull backs on a higher time frame chart.....so pretty nerve wracking for me at this point but getting less nervous about them already.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Thank you for pointing out the post yesterday. I took your NQ BO this morning, just grabbed 25 ticks. I should have let it ride. But it was a good show today!
The risk was 40 ticks.....taking less bordered on foolish.
Were I to quantify the edge, it was on risking the opening range for 40 ticks.....nothing less or more....essentially it either won or lost....and leaving it open until either one or the other was obtained....without regard to the actual risk involved.
Some days ended without 40 ticks but greater than zero. Other days ended without a stop out but a loss none the same.
Most days ended with a profit and not moving the stop at all was part of that test.
Unless you are prepared to trade it under these circumstances, don't bother. Find another edge. One that suits your risk more appropriately. I don't mean to be harsh but these are the conditions I've been working with.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
