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Trader1034's TST journal


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Trader1034's TST journal

  #51 (permalink)
Trader1034
New York
 
Posts: 87 since Nov 2016
Thanks Given: 6
Thanks Received: 76

Day 8:

13 days left and $8743.52 to go. With 6 average trades a day, I would need an expectancy of $112.10 going forward. I'm still in the red zone. Account can't fall below $147,444 so ideally I'd like to be $4500 above that to be out of the red zone. $672.58 per day gets us to $9k by the end of the combine. Looking forward, there's going to be window dressing next week so need to be aware of that. I also want to be comfortable before the jobs report and have enough gunpowder as that's an important day and would like to have enough risk capital for that event. 1/2% goal for Tuesday or $750.

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  #52 (permalink)
 
johny1971's Avatar
 johny1971 
Omaha, NE/USA
 
Experience: Beginner
Platform: S5 Trader; Jigsaw; TOS
Broker: Stage 5
Trading: ZN
Posts: 110 since Sep 2016
Thanks Given: 221
Thanks Received: 105

Trader 1034,

I am enjoying your journal and appreciating your emphasis on expectancy. I have a few questions.

So, is it that any positive expectancy is the same as Expected Value?

How do you come up with the .4365 win for each dollar risked?

Are there other expectancy models you considered? I just completed my first week of sim and to evaluate I used Van Tharp's R multiple model. I divided average win by average loss to get -.87R to tell me for every dollar risked I would lose 87 cents. Then multiplied that by number of trades to get -23.75R (which I do not know what that means!).

And, would you say the idea of expectancy is a little flawed given the idea of replicating a trading environment from one day to the next is impossible?

Thanks!

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  #53 (permalink)
Trader1034
New York
 
Posts: 87 since Nov 2016
Thanks Given: 6
Thanks Received: 76



johny1971 View Post
Trader 1034,

I am enjoying your journal and appreciating your emphasis on expectancy. I have a few questions.

So, is it that any positive expectancy is the same as Expected Value?

How do you come up with the .4365 win for each dollar risked?

Are there other expectancy models you considered? I just completed my first week of sim and to evaluate I used Van Tharp's R multiple model. I divided average win by average loss to get -.87R to tell me for every dollar risked I would lose 87 cents. Then multiplied that by number of trades to get -23.75R (which I do not know what that means!).

And, would you say the idea of expectancy is a little flawed given the idea of replicating a trading environment from one day to the next is impossible?

Thanks!



Thanks!!! I view expectancy as a benchmark for how you're doing. When I'm actually making a decision on taking a trade, I'm not factoring in expectancy but rather expected value. EV is just a measure of a trade having a positive outcome. Say one of your setups is a fib pullback to the 61.8% and also assume that you've kept records on this setup from the past and know it works 75% of the time. Now assume your stop is 3 points away on the ES. At this point you know that you would need at minimum 1 ES point just to break even. Say you're expecting the move if the trade works to max out around 2 ES points. Well the trade now has a positive outcome or positive EV. So you always want to make sure you expect a positive outcome when you're deciding on taking a trade or not. Expectancy on the other hand is more like an hourly rate in poker. Say you play for example $5/$10 no limit holdem and from your records you have an hourly of $100 an hour over a good sample like 4000 hours. When you're playing, you're not counting your profits every hour to make sure you've made the $100 for that hour. But you are using EV on decisions of putting in more $$ in the pot during a hand. As expectancy is more a benchmark, you see when you're trending down and understand that there might be an area that needs focus as you're not making what you should. At the same time you should also note when things are really working to maybe focus on what got you in the zone and try and replicate what you're doing correct or better. I wouldn't think the idea of expectancy is flawed because at least in my case I'm not trying to replicate anything from day to day. Every session is unique. I have no idea how Tuesday will play out and I'll take things as they come. I'm never going to be able to tame the market that's impossible. I respect it and manage risk. The market decides when I get my paycheck. But over a large enough sample size you start to get an idea of what you're capable of through expectancy. Is it guaranteed that if I have an expectancy of $50 per trade and I click 10 times I'll make $500? Of course not.

Coming up with .4365:
Say you risk $400 and won $100. You could also say you risked 4 to win 1. You could also say you risked $1 to win $0.25. All you're doing is breaking it down further. $100/$400=.25. So for every $1 risk in this example you're winning $0.25. So I'm basically taking my average winner and average loser and breaking it down. Some also refer to this as the payoff ratio.

R multiple:
Just makes you look at your profits in terms of risk. Say I told you I made a thousand bucks today you might say that's great. But is it? Say I told you I risked $9000 to win that $1000. Not so pretty anymore. Now assume I told you my risk was only $200. She's looking pretty hot now. In the first scenario where your risked $9k, you have to be correct 90% of the time just to break even. That's crazy and a whole lot of unnecessary pressure. The second example you only have to be correct 16.67% of the time for a break even. You could literally be wrong 80% of the time and still make money on that. Looking at your profits in terms of your risk is R.

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  #54 (permalink)
 
Schnook's Avatar
 Schnook 
Munich, Germany
 
Experience: Advanced
Platform: Sierra Chart
Broker: Interactive Brokers
Trading: liquid products
Posts: 570 since Jul 2016
Thanks Given: 1,166
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Trader1034 View Post
I definitely use stops. In the morning I usually place a bunch of orders at levels I'm interested in. The only reason I'm doing that is to hold my place in line. Once the market starts coming up to those levels, I determine if I'm still interested. Once the trade goes off I usually have time to place my stops. My stops aren't a few ticks away like most retail trades so I generally have time to place them once in a position. NG was a sweep. Imagine if oil went from $53 to $54 in 30 seconds but not around the inventory report just randomly. That's rare but essentially what happened with NG. Someone came in and swept the book. Sometimes it's a fat finger trade sometimes it's intentional. The book was thin so it's easier to pull it off.

I wouldn't say I have a huge edge trading from working on the street. I think it's more the 10,000 hour + screen time that's way more helpful. I'd say what I got from being in the business is my style of trading where I trade like an institution would trade. But again that's not the only profitable style of trading. I know guys that trade only fib setups and are profitable. They become a master of whatever and just execute. You just have to find something that fits your personality that you can relate to. If taking 6 points of heat is not your deal some styles of trading don't fit. If scalping and dumping a bunch of trades that move 5 ticks against you is not your deal that won't work. Once you find what works it's basically execution. If I had to give advice, I'd say view yourself as a risk manager. The profits work themselves out. Also put in the time. This morning I'm literally going bar by bar from this week on replay. How many people are studying Saturday morning on Christmas eve? I'm sure this is going to sound funny but I feel like I have an advantage from playing poker. I've been playing profitably for a while and incorporate a lot of things into trading. Same with trading I keep journals where I can give you my hourly rate, what days of the week work, what stakes work, all kinds of data. I think anyone willing to put in the time and effort can find success trading. One last note. It's the hardest way to make an easy living.

That's great color, thanks for the thoughtful response.

And you're absolutely correct on that last point. After all, if it was easy, everybody would be doing it.

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  #55 (permalink)
 crystalball 
portland, oregon/ usa
 
Experience: Advanced
Platform: tos ib
Trading: es gc GBPJPY options
Posts: 16 since Sep 2016
Thanks Given: 6
Thanks Received: 11

Is your strategy backtested? Or are you trading off of instinct and live judgement?

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  #56 (permalink)
 
Tymbeline's Avatar
 Tymbeline 
Leeds UK
Market Wizard
 
Experience: Intermediate
Platform: Tradovate
Broker: Tradovate
Trading: MES, MNQ
Frequency: Several times daily
Duration: Minutes
Posts: 644 since Apr 2015
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Trader1034 View Post
I'm sure this is going to sound funny but I feel like I have an advantage from playing poker.


I think it makes good sense, actually.

The use of probabilities and statistics isn't altogether dissimilar.

I've also noticed similarities, talking about trading with poker players. For example, traders attracted to methods with the highest win-rates remind me of poker players who want to win as many pots as possible (rather than "as much money as possible") and both these groups seem to end up losing, in the long run.

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  #57 (permalink)
Trader1034
New York
 
Posts: 87 since Nov 2016
Thanks Given: 6
Thanks Received: 76

I'm not out but I'm not sure I'll continue. The primary reason to take this combine was to see if I'm able to manage other people's money. It's pretty clear yesterday and today as I was super busy with my stuff that I'm not able to focus on another account. Seemed like it might be possible with slower conditions. If I have time I will try and post market analysis to help people out. Demo down $117.70 on day 9. If I do change my mind and continue I'll post more stuff here.

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  #58 (permalink)
Trader1034
New York
 
Posts: 87 since Nov 2016
Thanks Given: 6
Thanks Received: 76


crystalball View Post
Is your strategy backtested? Or are you trading off of instinct and live judgement?

Not trading on a gut feeling. My trades are positioned where institutions would be interested in trading so I'm trying to piggy back with paper protection.

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  #59 (permalink)
 crystalball 
portland, oregon/ usa
 
Experience: Advanced
Platform: tos ib
Trading: es gc GBPJPY options
Posts: 16 since Sep 2016
Thanks Given: 6
Thanks Received: 11


Trader1034 View Post
Not trading on a gut feeling. My trades are positioned where institutions would be interested in trading so I'm trying to piggy back with paper protection.

do you know where theyd be interested because you worked in one? how could an average retail trader learn where institutions are interested?

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  #60 (permalink)
Trader1034
New York
 
Posts: 87 since Nov 2016
Thanks Given: 6
Thanks Received: 76



crystalball View Post
do you know where theyd be interested because you worked in one? how could an average retail trader learn where institutions are interested?

I'll try and continue posting so you can get an idea.

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Last Updated on December 30, 2016


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