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THREE SET UPS


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THREE SET UPS

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  #781 (permalink)
 Jeff Castille 
Northern California
 
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Here's today's 6E 15 minute chart. Notice all 4 inside bars that occur during trade zones are winners. The second inside bar worked but was a little close to news.

So what's it going to be ???? 5 minute or 15 minute?

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  #782 (permalink)
 ikew 
ny
 
 
Posts: 39 since Oct 2009

I think that anyone that consider this IB as a trading setup should first read this:

TraderFeed: Toby Crabel And The Epistemology Of Trading Expertise

And than go and read:



cunparis post # 746: "In fact in just 2 days it almost wiped out an entire month of gains"


When you SL/DD is a lot larger than you PT this is usualy the end results. Its not an "IF" its a "WHEN".

If your IB is 25 ticks, you try to get 8 ticks and your SL is 25, how many trades you need to win just to BE after a losing trade? (So lets say you are the greatest trader with 70/30 win/loss. Do the math and see how long it will take you to refund your account...)

Same story as adding to a losing trade to get a "better" entry cost, its the when not the if.

Sorry to break the party......If trading was so easy as the 15 min IB, no one will be on the losing side in this industry.....

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  #783 (permalink)
 Jeff Castille 
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ikew View Post
I think that anyone that consider this IB as a trading setup should first read this:

TraderFeed: Toby Crabel And The Epistemology Of Trading Expertise

And than go and read:



cunparis post # 746: "In fact in just 2 days it almost wiped out an entire month of gains"


When you SL/DD is a lot larger than you PT this is usualy the end results. Its not an "IF" its a "WHEN".

If your IB is 25 ticks, you try to get 8 ticks and your SL is 25, how many trades you need to win just to BE after a losing trade? (So lets say you are the greatest trader with 70/30 win/loss. Do the math and see how long it will take you to refund your account...)

Same story as adding to a losing trade to get a "better" entry cost, its the when not the if.

Sorry to break the party......If trading was so easy as the 15 min IB, no one will be on the losing side in this industry.....


Sadly your ignorance is talking here.........if you had bothered to actually read this thread and understand the money mangement you would not be so ignorant.

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  #784 (permalink)
 ikew 
ny
 
 
Posts: 39 since Oct 2009

I did read it all. MM is NOT to cover or a replacment for a losing strategy in the long term.....But, hey, what do I know...Its just my free opinion....

that why I refered to: cunparis post # 746: "In fact in just 2 days it almost wiped out an entire month of gains"

and to: https://traderfeed.blogspot.com/2007/03/toby-crabel-and-epistemology-of-trading.html that knows a bit more than me.


Good luck.

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  #785 (permalink)
 cunparis 
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ikew View Post

And than go and read:



cunparis post # 746: "In fact in just 2 days it almost wiped out an entire month of gains"


When you SL/DD is a lot larger than you PT this is usualy the end results. Its not an "IF" its a "WHEN".

If your IB is 25 ticks, you try to get 8 ticks and your SL is 25, how many trades you need to win just to BE after a losing trade? (So lets say you are the greatest trader with 70/30 win/loss. Do the math and see how long it will take you to refund your account...)

Same story as adding to a losing trade to get a "better" entry cost, its the when not the if.

Sorry to break the party......If trading was so easy as the 15 min IB, no one will be on the losing side in this industry.....

I think you have very valid points. I said pretty much the same thing "not if but when" when I did my backtesting but I'm too lazy to find the post. I said a drawdown will be very likely and how many people could sit through it without throwing in the towel? I threw in the towel after one bad day!

In my experience, I've always done well making little steps and then it was the big losses that would kill me. Sometimes wiping out a large % of my account and setting me back. Not only financially but psychologically as well. Some talk about the black swan. I'm talking about little black ducklings. Cute and furry and they sneak up on you. What some don't realize is this is a game of numbers and there are millions of combinations. The guy who started the IB trade 6 months ago made a ton and can sit through a drawdown. The guy who is unlucky enough to start the day of the drawdown is going to get screwed big time. I must be unlucky because every time I find a pattern I can backtest, it seems to stop working. I must be slow. By the time I find it everyone has.

This IB trade is not a secret. The unattractive R:R has probably convinced most traders to pass it up. That doesn't mean one can't trade it and make money.

I consistently win money at poker. I almost never lose. What's my secret? I play $0.02/$0.04 limit hold'em. The good players don't want to play for pennies and so it's full of mostly newbies. So just because the pros pass up on something doesn't mean it's not bad, it just means they found something better.

Now I don't believe one needs a reward much greater than the risk. The market is very efficient for this. Not saying it doesn't exist but it's elusive. Even if you say "I risk 4 and have my target at 16 so it's 4:1 good trade" no not exactly. The percentage of your target getting hit has to be > than 25%. And that's usually the dealbreaker.

I think a R:R ratio around 1:1 is not a bad place to start. Then a win rate > 50% is the goal. Once that is achieved a second target can be added that is say 1.25 or 1.5 the risk. And go slowly.

btw here's the equity curve for my automated strategy:


I re-optimized without any breakeven stop (I think the breakeven stop trigger & offset (2 variables) could make a bit of curve fitting). I got the same curve & same result. 15 tick target is still optimal.

Now I'm not saying those trading this can't or aren't making money. Using +8/+16 could be more profitable, I just couldn't prove it. But my confidence level drops a bit when I can't backtest something profitable on a mechanical strategy.

If I were to persue this inside bar strategy, I would use the 15min in conjunction with a smaller tick chart. I'd try to get in on the breakout before the 15min breakout. Take a smaller breakout. I'd also use a tighter stop based on the tick chart. That's a bit how I was trading it, I was watching a 200 tick chart with the 15min. I trail stop that way. And that can reduce risk but sometimes it goes 1 tick and then runs the other way and it's not possible to trail. So that's just my idea.

So good points about R:R. I like to give my trades more room, sometimes too much on ES. That will be a problem when trading larger size. So I'm working on determining the optimal stop. It's a work in progress.

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  #786 (permalink)
 sam028 
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ikew View Post
I did read it all. MM is NOT to cover or a replacment for a losing strategy in the long term.....But, hey, what do I know...Its just my free opinion....

Good luck.

@ikew comments make sense, imvho, the RR ratio is very not good.

Maybe in adjusting the first target, no 8 ticks every time, but a target which is correlated with the volatility ?
I'm sure someone has already wrote an ATS for this, as it's not very hard to do, maybe we can have some backtests results ?

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  #787 (permalink)
 Jeff Castille 
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ikew View Post
cunparis said "In fact in just 2 days it almost wiped out an entire month of gains."

That is what I was talking about when your R/R is 8/25 and not 1/1.5

Again.........with reference to Cunparis.........he was making up his own money mangement......which is fine.......it just didn't work very well.

Many of the trades that he lost on were winners for me !

I wish you would just read the damn posts. Cunparis clearly stated that the reason for his failure was more HIM than the set up.........READ.....READ......READ.....

Learn about the concept of scaling out.

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  #788 (permalink)
 cunparis 
Paris, France
 
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ikew View Post
When you SL/DD is a lot larger than you PT this is usualy the end results. Its not an "IF" its a "WHEN".

Same story as adding to a losing trade to get a "better" entry cost, its the when not the if.

ikew - Your post inspired me to post this post in my journal. It's something I have been working on for a while now.

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  #789 (permalink)
 Jeff Castille 
Northern California
 
Experience: Intermediate
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Broker: Amp Futures/ Zen-Fire
Trading: YM and CL
 
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Posts: 2,119 since Jun 2009
Thanks: 1,783 given, 3,299 received


ikew View Post
I did read it all. MM is NOT to cover or a replacment for a losing strategy in the long term.....But, hey, what do I know...Its just my free opinion....

that why I refered to: cunparis post # 746: "In fact in just 2 days it almost wiped out an entire month of gains"

and to: TraderFeed: Toby Crabel And The Epistemology Of Trading Expertise that knows a bit more than me.


Good luck.

If you read it all you have a comprehension problem.

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  #790 (permalink)
 cunparis 
Paris, France
 
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Jeff Castille View Post
Again.........with reference to Cunparis.........he was making up his own money mangement......which is fine.......it just didn't work very well.

Many of the trades that he lost on were winners for me !

I wish you would just read the damn posts. Cunparis clearly stated that the reason for his failure was more HIM than the set up.........READ.....READ......READ.....

Learn about the concept of scaling out.

Yes, my decision to focus on ES was mainly because this strategy needs either a bigger tolerance for risk or some discretion to reduce risk. I lost more on one day trading crude than I had the entire month on ES.

I had a choice between :

- trading only an ES system with a profit factor of 8 (my stats are posted in my journal)
- trading the ES system with a crude system that has PF of 1.19

Since trading crude had a negative impact on my ES results, the choice was obvious.

Now the 1.19 PF is due to the way I traded it. I took some losers that Jeff didn't take. I went for 15 ticks when he was out breakeven. I sometimes cut my profit short while he got 8+16. So as I previously wrote it's not a reflection on the method but on how it was working for me.

At this point, I'm much more concerned with reducing my risk and having very little losing days than I am making a ton of money. The reason is with low risk and very few losing days one can trade size and make unlimited money.

Here is my ES stats for July. Only one losing day and it was $100. This is very important when trading size.



Now here it is for my crude IB results:



4 losing days, which is still OK but the magnitude of the losses was a bit difficult.

Everyone has to make their own decisions. I share my results so people can learn from my experience. I'm lucky in that I finished my crude IB experiment with a few hundred dollars in profit. I hope others will share their experiences. from the lack of posts it seems no one is trading it so I'm not sure all this discussion is that useful.

And again, my results are unique to me. Unless one trades this like a robot, everyone will have different results. On my last losing day Jeff didn't take 2 of the trades that were losers. So discretion can have a HUGE impact on the performance. Had I not taken those I would have done much better for the month. A simple decision to not take a few setups would have changed everything. And that was another reason for me to focus on ES because I can't make these discretionary decisions on two markets at the same time and still be efficient.

So all I can do is show my results and also the mechanical results of the backtesting and let everyone make their choice. I have never seen a mechanical method that was profitable without any discretion. I do not believe such a thing exists. If it did we'd automate it and drive Ferrari's.

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