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Small losses...large gains...sometimes
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Small losses...large gains...sometimes

  #1 (permalink)
Elite Member
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Small losses...large gains...sometimes

Posting a journal covering a simple ES trading strategy that has a base 10:1 (win/risk) where the returns deminish over each loser in time .

I am computer illiterate so getting me to set up charts etc will be a challenge...

In the meantime, I can say the settings are a 5 point price range bar and an ema setting...that'it...

The average loss runs around 1 point...profit goal 10 points... Average trades per day varies between 3 and 6 .

After 5 consecutive failures will increase allocation by 1 contract...and every 5 consecutive losses will continue to add another contract.

Account adequately covers initial loss by approximately 480 times.

I shut down trade before close and re open...just a habit I have developed...can go for me as against me...

Downside... needs 23 1/2 hours attention!!!... and a lot of patience...and there will be times that I am going to be "lucky" by missing a trade as I can be very unlucky if it hits and I am not on it..I accept that.

ES market volatilty suitable for trading this method......not perfect..won't get rich ,but will be profitable..

In the meantime I trade ES and 6E ...maybe journalize a strategy in 6E at a later date...

To each his own, but if there is one thing I would like to say is that I have finally come to grips with being properly capitalized to trade...

Hoping journalizing will keep me focused and assist in maintaining discipline.

Trader

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  #2 (permalink)
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  #3 (permalink)
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I don't think the addition of another contract would necessitate 5 losses in a row. If you do have 5 in a row, perhaps you should rethink your strategy. Sure it does happen from time to time, but the post's I've read show that if you have 3 losses that day, you just aren't in the groove and need to take the rest of the day off.

Also, multiple contracts on the ES starting out would be murder on your account. Theoretically, 1 contract's profit target would be the same for 2 contracts, or even 5 contracts. Why don't you create a strategy which is profitable with 1 contract and add multiple's after ensuring consistent profitability?

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  #4 (permalink)
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johnnycakes78704 View Post
I don't think the addition of another contract would necessitate 5 losses in a row. If you do have 5 in a row, perhaps you should rethink your strategy. Sure it does happen from time to time, but the post's I've read show that if you have 3 losses that day, you just aren't in the groove and need to take the rest of the day off.

Also, multiple contracts on the ES starting out would be murder on your account. Theoretically, 1 contract's profit target would be the same for 2 contracts, or even 5 contracts. Why don't you create a strategy which is profitable with 1 contract and add multiple's after ensuring consistent profitability?

Thank you for your observation, however there a couple of points I need to make.

It is accepted that there will be strings of small losses...the losses average around 1 point...easily affordable in light of the profit goal being 10 times greater.

And what happens if the fourth trade on the day was a 10 point winner?...does that mean I still was not in the 'groove',because I had 3 successive losers?

Factually, the value of the second contract winner will be greater than the first contract winner until approximately the 8th successive loss.

I like criticism because ,more often than not, a little 'gem' can come out of it...

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  #5 (permalink)
Market Wizard
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I think it's fine to have a system that has a lot of small losers with a few big winners. It is outside most people's comfort zones though.

I notice you state you are computer illiterate. As such - could you tell us how you managed to figure the win/loss ratios and the overall profitability of the system? This is something most do with software.

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johnnycakes78704 View Post
I don't think the addition of another contract would necessitate 5 losses in a row. If you do have 5 in a row, perhaps you should rethink your strategy. Sure it does happen from time to time, but the post's I've read show that if you have 3 losses that day, you just aren't in the groove and need to take the rest of the day off.

Also, multiple contracts on the ES starting out would be murder on your account. Theoretically, 1 contract's profit target would be the same for 2 contracts, or even 5 contracts. Why don't you create a strategy which is profitable with 1 contract and add multiple's after ensuring consistent profitability?

I think the OP has a trading plan, which he is sharing with us, of which we dont yet know all the details....

first of all, 5 losses in a row are not that big of a deal, if you paid attention, he limits his loss to 1PT.. so the odds are still on his favor.. (he does not mention drawdown, but that is another story)... considering he has not provided any additional data, it would be premature for you to state that he should "re-think" his strategy.

lastly, as long as his account his properly capitalized, $50-100K IMO, he can take quite a few of those 5 losers in a row and survive, and by adding another contract he is leveraging sort of a martindale strategy to recover his losses... again 10:1, without more details, is f**** amazing if it is realistic..

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DionysusToast View Post
I think it's fine to have a system that has a lot of small losers with a few big winners. It is outside most people's comfort zones though.
.

most people want to have no losers... which is totally unrealistic... I rather have small losses that I know will happen, than the catastrophic lost that eats half or more of my account because I could not handle being wrong. It is good to be wrong, as long as it is manageable.


DionysusToast View Post
I notice you state you are computer illiterate. As such - could you tell us how you managed to figure the win/loss ratios and the overall profitability of the system? This is something most do with software.

dood... people where trading before computers .. ... and a decent math guy can calculate those ratios without major problems... most traders are drilled on math.. if not...

dont believe me? take the test and see how you do...

TraderTest.org - Do you have what it takes?

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  #8 (permalink)
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DionysusToast View Post
I think it's fine to have a system that has a lot of small losers with a few big winners. It is outside most people's comfort zones though.

I notice you state you are computer illiterate. As such - could you tell us how you managed to figure the win/loss ratios and the overall profitability of the system? This is something most do with software.

Pen and paper ...started off by drawing graphs for stocks until it became second nature to anticipate the 'next move'...Numbers are simple if you keep them simple...I walked out of math 2nd year high school...so I have to keep it simple as that is all I know.

Like the Duracell battery this little strategy.. it justs kept on keeping on...

Basically comes down to the law of long numbers ,as they say, and a simple money management strategy...

Incidently, my stop is approximately 10% of current daily balance...most would be aghast at such a prospect I suppose, but it has to take at least between 26 and 30 consecutive losses in a relatively volatile instrument to take a 'hit'.

On the other side...trading has to cover the potential stop with at least 7 winners...

It is a grind...

BTW...can someone tell me if I should be providing real time trades or wait until the end of the day to update the journal?

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Family Trader View Post
BTW...can someone tell me if I should be providing real time trades or wait until the end of the day to update the journal?

your preference... RT trades provide IMO validity to your skills... hindsight is always 20/20.. and it is easy to mark up a chart after the fact...

as a recommendation... to capture your charts.. just press "prtsc" and then open click on "start" and select run and type "paint" ... pless CTRL+V and then just press "select" ... choose what you want to show (the chart) and press "crop"... and then just save the pic as a PNG.. and then upload as an attachment to the forum...

that should help you out to make the posts complete...

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  #10 (permalink)
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Can I ask what the win rate was on your testing?

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