All I can say is anyone trading a risk reward less then 1:1 is gonna be a loser in the long run.
There is no way to "get the market". In the end its all a dice roll, and trading an advantaged risk reward is not enough. One needs to also limit the number of events (trades) per day. I keep it to one trade per day per model. This is the only way to really define ones risk.
Anyone trading stops larger then targets and also trades 5-11 times per day is reckless and ruin on the way.
Spending much time in the pits has taught me that anyone worth listening too is not selling anything. You need to pull it outa them. So when someone or something promises the secret then bounce. there is no secret, except that no one really knows how to manage risk and guess what guys....its not described in some book or ecourse.
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This post is sounding more and more like a retail trader whom is never going to manage real money.
To have a high win rate; the reward to risk has to be inverted. This is what most retail traders do, however to make money in this profession; you have to think about doing things that seem hard and are not what most retail traders are doing.
The best of the best of the best hope every year to net 24-36% on their capitol. And this is when they KNOW that in the end of this games they can only HOPE to be right 50% of the time.
I dont give a rats ass on the system one chooses to use; in the long and short it will be a 50-50 win rate. What makes them money is that their winners are bigger then their losers....hence an advantaged risk reward. All the real traders know their is no intelligent secret that exists regarding trading...except one.....IN THE END YOU WILL BE 50-50, so you better believe you need to focus on advantaged risk reward.
Secondly, to not control the number of events in a trading day (number of trades) you are creating some half ass risk profile. Controlling ones risk is numero uno...not preservation of capitol. Preservation of capitol DOES NOT mean holding onto what ya got in the account...if that is the case then just dont trade a cent and you will have a perfect record of preservation of capitol.
Let me make my bullet points and then propose a challenge:
1. If there were ANY real advantage to exist in "reading markets" then big money would have found it and exploited the edge till the market itself no longer existed. Hello quant systems!!!
2. Risk profile and risk to reward models is the SECRET. Then allowing ones advantaged model to play enough events to pan out the 50/50.
3. Retail does not make money! Trading a retail style = retail trader = no money.
4. Show me the first millionaire whom learned to trade "buying a system online"
lets us both create a live account with 5grand and use broker statements to see whom is managing/trading their account more successfully. We can start now and end it 12/31/11.
This will prove that by not focusing on the real man behind the curtain; one is doomed for failure.
P.S. My nameless mentor made money buy throwing a nerf dart at the monitor and based on where it landed he bought/sold the open using an advantaged risk/reward model. And it made money consistently....
point is....there is not intelligent way to analyze the markets that will tell ya anything. Its gambling, so one can only prevail using gambling techniques.....hmmmmm advantaged risk reward.
Note...that style impresses the one trade a day montra!
Know what your risk is always and that does not mean how much dam money one is risking on a trade or daily max losses.
The following user says Thank You to gparkis for this post:
What makes you think one can cannot have a winrate above 50 % while using a risk<reward ratio ?
Of course it can be done.
You are also wrong on the other accounts, what you state is completely unfounded.
Goldman Sachs et.al. can hire as much PhDs as they want. as long as there are trends, money can be made. You just have to look at a chart to realise this.
Have head and shoulder patterns, break outs, pullbacks to a trendline etc. stopped working because there are "Quants" these days ? No...these things work today and have always worked.
If you think that there is no intelligent way to analyze the market, then I should actually like you because that means that you will be one of the million players on the other side of my winning trades because you obviously don't seem to mind going long in huge downtrend for example.
While money management and psychology are integral to a good trading strategy, they are not the real edge. The true edge is a profitable setup.
having quants does not change the market and any claim as such is absurd.
Setups, trends, crossing lines, dog pissing on the paper ONLY will be profitable if risk is managed properly to sustain the market.
And do you honestly think the market knows there is a head and shoulders setup on a 5 min???? seriously. What happened two minutes ago in the market is irrelevant now in regards to processing information.
Win rate and 50/50 are NOT the same thing. One is how often you win your trade and the other means in every trade it has a 50/50 market move either up or down.
There is no intelligent way to KNOW the markets, thats called prediction and that means psychic powers.
Trend following is not prediction my friend.
The system one follows is irrelevant, and thats my point. But what will make or break the account is how risk is managed and engineering an advantaged risk reward ratio.
Advantaged risk reward models have always and will always outperform win rates. The two are an inverse relationship.
Side note...Ill bet ya goldman sachs has hundreds of models that are market specific..and ill also bet ya they are ALL an advantaged risk reward model.
"While money management and psychology are integral to a good trading strategy, they are not the real edge. The true edge is a profitable setup." This sentence of yours just showed me you have no idea what your doing. So again..show me the millionaires managing billions of dollars from some setup....and one where the true edge is not an advantage risk reward.
Maybe you need to get in agreement with yourself before you start spewing out "ultimate truths" without any evidence to back it up.
To use available information to make an educated guess is not equivalent to having psychic powers. You are claiming that all of the analysts are wasting their time? What about PE funds? Are they relying on R/R ratios too? They just buy random companies?
If money management is everything, why does my system perform better when I enter at certain levels?
What about all the arbitrage institutions are doing? How can you explain that?
I will say that risk and money management can make or break an approach, but to say the approach is irrelevant just shows your ignorance...
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The following user says Thank You to Big Mike for this post:
But it IS an attack and you are a vendor bashing a vendor. Wow. I am a member of their room and you, my good man, are off base on some of your claims above! And by bashing them you are attempting to promote yourself, what a terrible manner in which to do business. They call trade entries minutes and hours prior to the actual entry and stick to them. They report their losers and do not make excuses for them as many rooms and vendors do. Does your software do that? How about you take a five day trial and if not impressed then move on! But how many derogatory posts have you used here - I am not certain but I counted three on the first page alone. Do you have issues with them or are you only attempting to, in a roundabout way, promote your own wares? H,mm? Do you dare answer?
Last edited by mmtrader4; June 28th, 2011 at 06:59 PM.
Reason: addition to post