Mike, I was able to be in the trading room four days this week and it was a very good week for Mark. The ABC patterns seem very consistent and common if you are patient for those setups. That pattern and maybe one more, say the Momentum Entry, may be sufficient to apply to the 3 markets he watches in order to do very well. Patience in waiting for the ideal, high probability setups seems to be his goal and strength.
The challenge I have wrapping my head around is the risk:reward ratios. At present, there are basically three outcomes for his four contract strategy:
Risk 40 ticks and lose 40 ticks - when the trade fails
Risk 40 ticks to make 10 ticks - when only profit target one is reached.
Risk 40 ticks to make 30 - when profit target two is reached
This obviously requires a higher win percentage, which he tends to achieve.
Unfortunately, needing a higher win percentage will exaggerate the loss outcome for someone new to his strategy that makes mistakes in execution.
Is there any discussion or assistance to adjust the risk:reward parameters for the markets he trades?
I know he uses smaller range charts for ES and the grains, but I would guess the reward is also proportionately reduced and the same issue exists.
I am trying to honestly evaluate his strategy. He seems to have a very reasonable structure from which to evaluate trade setups, and he is always looking to improve and simplify.
Thank you for any assistance.