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Everything posted by Kiwi
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Thats what I mean. It takes reading then experimenting a bit with numbers to make sense of it. Then of course, I forgot to mention the frequency with which the opportunity arises. Would you rather have a setup that gives you an expectancy of 10 once a month or a setup that gives you an expectancy of 1.3 three times a day (lets assume you have to watch the charts the same extent for both)? If you give me an answer I'll show you how to do the calculation - lets assume that you can risk 1% with a very low risk of ruin (1 in 10,000).
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There is a lot to this stuff and it requires a bit of thought to see it. The OP expressed one view, and then improved upon it with the following posts. This is about one part of the game, money management, and I'd just like to hint/touch on the complexities so that the OP can do the research. I'll ignore costs (spread and commission) just to keep it a little simpler. It is correct that what you want is a profit per trade. So ... 35% wr, 50% wr, 60% 80% All can give a profit per trade. Profit factor = Won money divided by Lost money. At 35% you need an average win 3.7 times the average loss for a PF of 2.0. At 80% you need only 0.5 times the average loss for a PF of 2.0 (yes, that is right, win size half the loss size). But PF is not a good enough measure. Expectancy is a better measure. It is (the Won Money minus the Lost Money) divided by the Risk per Trade. Why is it better? Because if you bet x% of your account on each trade and have yyy trades per year then you can use it to calculate your wins for the year. Its also better because you can have a decent profit factor and a low expectancy. In the two examples above a 35% pf 2 system has an expectancy of 1.56 so for every dollar you risk you get the dollar back + 56c. The 80% pf 2 system has an expectancy of only 1.17 so for each dollar you risk you get the dollar back + 17c. Hmmmm ... this makes the 80% system sound not so good. But. What about bet sizing. Should you bet as big on the 35% system as on the 80% system. As it happens the answer is a resounding NO! Risk of Ruin (running out of money). With a 35% win system you are much much more likely to get a long string of losses than with an 80% system. Using the kelly ratio as a proxy for that risk. The kelly at 35% was 17% odd and the kelly at 80% was 40% odd so you could bet more than twice as hard on a 80% system as on a 35% system with the same risk of ruin. When you do that your expectancy on the 80% system roughly doubles to a much more respectable 1.35 relative to the 35% system. Confused? Well, you probably should be because money management and bet sizing is a little complex. But, if you're going to figure out how hard you should press an edge (entry, stop, capture process) then you will end up having to figure it out. For the record: I like an accuracy goal near of at least 45% ... its very hard to take long strings of losses. Entry and exit design for 45% systems (usually trend capturers) is very very different from that for 80% systems. Thales, for example, like many discretionary traders errs to the high side and will try to take a portion of his profits in the very high win ratios to give smooth and easily traded equity curves. He may keep a portion for a longer run but with low probability of doing better than break even on that part.
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From the Market Profile thread running currently (and a bit more interesting than when it started):
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This edge for the 123 (break of pullback to hl or lh) discussion is reminiscent of one at FF on inside bars. And the funny thing is that its backtesting that allows you to see that there is little or in some cases no edge. Here's the thing. The backtesting is actually right. If you take every 123 with a 1.1 to 1 target to stop then it will have no or little edge. Same with Inside Bars. Same with pinbars. Etc etc. One of the things in John Hill's book is that he does discuss the edge of various patterns/bars. I wrote a post about various types of entry and purposes here and don't want to repeat it. The unique edge for a 123 is that it gives you a well defined entry (price continuation after congestion following the probable start of a move) and a "tight" stop on that congestion rather than the bottom below it (if long). But by itself its pretty useless - its only useful in defining a good point to take a risk in the bigger context. Its edge over a price bar breakout in a pullback is that there is "more" continuation indicated by the break - but its at the expense of a bigger stop so different traders have different preferences. Similarly IBs in the DIBs method at FF. They test horribly. But they form at the early point in a bigger timeframe trend and give you a high probability in that context. The problem that MK showed is that when he took all the 123s he liked, his context wasn't good. And when Thales took all the 123s he liked his context was good. And someone else might be in between. So I would counsel those following the thread to look at two things: - how does thales use the 123 for entry and as a basis for managing his ongoing trade? - how does thales pick up the context that really makes it sing for him? It is real and it is there - but you'll have to work at it (read those two books!) and it will also have to be something that fits what YOU can do. Why do you think there are so many different approaches to trading? Why do you think so many fail trying to do what others can do? Even when they see it laid out in front of them in detail?
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(Don't look at the Chinese Government then )
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Not unless your average trade is in that noise zone. In which case ask yourself why the hell that should be so?
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If you guys are serious about using Chrome rather than Firefox you should look at Iron. Based on the OS software with the hooks that Google has inserted removed. SRWare Iron - The Browser of the Future Problem Chrome Iron Client-ID Chrome creates a unique ID through which a user can be theoretically identified. does not exist in Iron Timestamp Chrome remembers up to the second exactly when the software was installed. does not exist in Iron Suggest Depending on the configuration, each time you put something in the address line,this information is sent to Google to provide suggestions. does not exist in Iron Alternate Error Pages Depending on the configuration, if you have typed a false address in the adress bar, this is sent to Google and you get an error message from Google's servers. does not exist in Iron Error Reporting Depending on the configuration, details about crashes or failures are sent Google's servers. does not exist in Iron RLZ-Tracking This Chrome-function transmits information in encoded form to Google, for example, when and where Chrome has been downloaded. does not exist in Iron Google Updater Chrome installs a updater, which loads at every Windows in background. does not exist in Iron URL-Tracker Calls depending on the configuration five seconds after launch the Google homepage opens in background does not exist in Iron
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I take your setup and buy that pullback ... long 1.45060 ... stop 1.4487 .... your target (why? because you already have a 123 break and I'd prefer to buy this pullback as I don't believe in breakeven stops ... we shall see mr Thales ) . . . . LOL. That'll teach me ... stopped out.
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He's a smart guy, John Hill.
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LOL Blowfish. Put on your glasses. Then move the pictures around your screen. I checked and was sure firefox was better. Then I put firefox at the top and google in the middle. And google was better. It seems I should buy better screens - perhaps we can get a group rate? Have a good weekend, Kiwi PS. Try installing 3.7a ... it will install in minefield and its easy to use one or the other. I'd be interested to know if you thought it was faster than 3.6
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itrade, Invest in some good imaging software like acronis. Then store an image of your c drive (and others but less important for virus issues). Once a week store the image. If you get a virus of any kind then you just boot on a CD/DVD and restore the image. Virus gone. I no longer use real time virus protection (clam only) because I can be back to good in 30 minutes ... think of all the wasted checking that no longer happens.
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3.7 is an alpha ... its a newer stream than 3.6 But its never been anything but solid for me.
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Emini, I thought the method required at least a higher low and a high to break. What I see in that chart looks more like a knife, falling??
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Something I remind myself of: "Focusing on the outcome of a single trade shows a lack of faith in your trading plan. Indulging yourself in such trivial judgments is, at best a distraction from your ultimate goal as a trader, and that is: to get your trading into the long run." The thing is that this trade is the short run. And in the short run even the Casino can lose. In the long run probabilities play in your favour if, and only if, you do the same thing each time in the same situation - trade your plan! When I'm watching a trade that could lose 40 points or make 300 points or anything in between I keep reminding myself of the quoted paragraph ... I'm here to take the losses and the wins ... but make each trade a good trade (good = follows my rules; learning = didn't follow the rules; there are no bad trades). If each trade is a good trade then the long run is going to be fine no matter what happens in to this trade.
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I don't think emails are the problem they were a decade ago unless you open attachments (save them and then virus check them before opening). I use Snapshot but Macrium and Acronis are good too. I only use Snapshot because there used to be an alignment issue on SSDs with Acronis and Macrium. I believe its been fixed and for most users would recommend Acronis as easy to use and very functional.
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I don't run any in real time antivir any more. I just use Clam (free, minimum intrusiveness) and am careful about opening mail from people i don't know and test doubtful stuff I download. The real key to virus protection is to use an imaging program and store an image of your C drive. Then if you do get a problem you boot from CD and restore the uninfected image. Then you run virus scan to make sure that the other partitions are virus free.
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I will make a few. 1. It is amazing how people trading currency pairs forget that if USD is in 4 of them then all of them will be affected by the relative USD move (think risk). It is true that less active pairs might not make a change immediately (even though the "true" value of the USD dropped say) ... so you might get lag although you'd need to qualify if its tradable and the edge exceeds expenses. 2. Its amazing how things that we see don't prove out if we do the stats because of the distortions our perceptions include. Damned shame really. So you need to test any "I think I see" situations. If you're lucky you'll find a real edge that others are not seeing but be prepared to be like Edison developing the lightbulb.
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Yes, Grey conflicts with Brownsfan, Thales and others not because he is a bad trader but because he is dogmatic in some of his opinions. Others have shown to their own satisfaction that Grey1 isn't right (for them). It does seem that a lot of functioning traders are very dogmatic in some of their opinions. Which shows how many ways one can be "flawed" and still be very good at one aspect of ones deliverables. Funny old world.
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As attached .... 20 letters long ....
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I've been running Firefox 3.7 since a2 first came out. I also run the latest alpha of Google Chrome. Chrome is slightly faster than FF 3.7 but its not a big difference like it was when C first came out. Each FF makes the difference smaller. Chrome and my logitech mouse are not in love with each other -- google chrome's mouse handling is interesting Although V4 has extensions it doesn't have the rich variety that FF has - although I imagine that won't be true in 2011. Chrome's look and feel is different and if you like one you may well not like the other. Chrome is still aiming to be the "dummies browser." Google has deliberately kept it light on features and its still hard to customize. If you are a power user that might irritate you a bit. So FF3.7 for me. I keep upgrading the Chrome Alphas though and there is still a speed advantage. But its not much and it certainly isn't enough to make you go "wow ... I'm going to go with Chrome for a while and see if I like it" any more.
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So the broker pays the chart developer a monthly lease and you pay that to the broker in spread or other means of extracting the fees from you. Any idea how much the broker pays the platform developer per month? I'd expect that they'd then need to mark it up by 50% at least to cover their costs so that would give (or does this industry have much lower markups than most retail type operations)?
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Doesn't everyone ask themselves the question: if it is "free" then how exactly am I paying for it? If I can understand the funding mechanism I'm happy about "free" but if I can't I'll err on the side of caution.
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One change. Dropping GBP.JPY in favour of GBP.USD and AUD.USD. Why? Because the major currency movers trade the majors and thus S&R on GJ is a side effect of the real S&R; the S&R on GU and UJ.
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Happy New Year everyone. Well, because system trading is boring I've decided to add a little discretionary trading to hold my interest. I plan to post here although the method is not Thales. I will however "read charts in real time" and post in real time. I plan to trade off the hourly charts; trade EU, GJ and UJ. Later I may drop UJ and trade AE instead (or as well) but I want to get a better feel for how crosses (GJ) respect S&R vs majors (UJ) first. I'll basically use two approaches to entry: - wait for direction (thrust, over the mas etc etc) then buy either simple pullbacks if fresh or pullbacks that involve multiple tests (and stops being broken). - buy the break out points when it looks good in the style of two threads from forex factory . . . wmd's Trading With Deadly Accuracy Method and . . . BRV's No Brainer Trades Method Then I'll be using a similar exit to Thales. First off at a little over 1:1 and S&R. Second off at S&R normally but with a trailing stop if there seems to be a trend on the daily chart. Nothing too sophisticated and I may drop the second entry method if I'm not getting good results ... but I have a hankering to try it so I might as well document the try in real time My charts for each pair look like this. The reason for the 5m chart is that on the pullback entry style I sometimes will enter on the hourly break and will sometimes look for a short timeframe pullback first --- depending on the preceding 5m action. I'll probably post the second version to show the trade though as its simpler. So, it's hourly bar break instead of 15m pattern break - which will often give similar entries to Thale's method. Or its just buy where I think it should stop - which will be interesting and probably wrong (in which case it will be abandoned fairly quickly). .
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The well prepared Nigerian .... Guru trader who's first post here was to support TRO who, to most of us here, is regarded as a scammer (very like my Nigerian grandmum's lawyer who just sent me another letter), claimed that his earlier registration proved he was legit. But all that showed was that, if he was part of the other scam, he was well prepared. A well prepared Nigerian perhaps? This is the internet after all. One of the worries in this site is that James (and the rest of us) let people who don't survive at other sites because they get outed as bs'ers and scammers rest here as long as they don't start lots of threads (and even tolerate a bit of that). So we have Jack Hershey garbage, TRO hunting for pms asking for the extra (pay me now) bits of information and so on. I moderated for a while on Trade2Win and the most memorable scam we picked up was run from egypt. There were about 20 identities involved and they'd been registered over several years. There goal was to promote a couple of scam forex systems and they did a good job of it for nearly 2 years. But it was fully automated (including logging off their service provider and picking up different ip addresses) and one night their automation got out of synch .... so suddenly they all posted from the same address. And we got the b'stards --- but its bloody hard to catch a well prepared egyptian and here we don't try. I think the saving grace is that the numbers here are small so they don't make as big an effort as they do at T2W or FF.