Jonbig04's Log

[diablo272 10]

Re the text on that image: This may seem obvious, but if that kind of thing is happening time and time again, there is something wrong with your entry parameters.

[jonbig04 10]

Yup. Entering is tough, I know I can do it though. They've cost me around 28ES in those 3 trades, but I don't expect to make all that. I expect my stop to get run and for shit to happen. I'm working and have been working on them for a while. I have implemented some new rules that took me a while to test. I had to go and find all my entries and look for clues in price/volume. What I have a set of rules that helps out with later entries. Its tough because you can't simply invent random rules that happen to give you good backtest results, they have to have a solid grounding in PA. Anyways thats what I;ve used to come up with some new rules. I still wouldn't have caught today's move, but I would have caught 10 of the 28 that I have missed, and 10ES is a good start at least.

 

I'm also looking at my targets and possible expanding them to 10-15 ES. We'll see.

[AgeKay 10]

Jon, I don't get your entries. You seem to enter on random places. They don't seem to be based on PA at all.

[jonbig04 10]

really? I would say what I do is pretty obvious haha. The places are predetermined days or weeks in advance. Actually there are only 2-4 places I can enter on any given day. Look at yesterdays chart, really what I was doing should be EXTREMELY obvious.

Edited May 21, 2009 by jonbig04

[sevensa 10]

really? I would say what I do is pretty obvious haha. The places are predetermined days or weeks in advance. Actually there are only 2-4 places I can enter on any given day. Look at yesterdays chart, really what I was doing should be EXTREMELY obvious.

 

Hi Jon

 

Something I have been wondering for while, but didn't want to sound like I am negative about what you are doing as you clearly is putting a lot of effort and thought into this...

 

I think you mentioned that your accuracy is in the mid 20%? If this is still the case, are you sure your results are based on your entry points and not on your rather big risk:reward ratio? I think you risk something like 1.25 points for 10 to 12 points rewardon the ES? My gut feeling is that you might get the same results with random entries with risk:reward ratio like that. Have you maybe did some testing that you indeed get better results because of your entry points over random entries?

[jonbig04 10]

I see what you mean, however I think you have to look at accuracy in the context of r/r. The higher the reward, the more difficult the accuracy becomes. i see your train of thought, in that only being correct 20% -a monkey could be right 50% of the time. But all accuracies aren't equal. The reason my accuracy is so low is because i demand such high r/r, not vice-versa. A 50% average accuracy would be easy with different r/r, I simply don't take that way out because I know 35% with 8-10x reward is possible. Could you enter anywhere, in random place and achieve 20% accuracy? Of course, but with with 9x reward, no way. Think about it, if that were the case we would all be rich!

[jonbig04 10]

It often seems like people attach their trading ability to accuracy. Its the whole 'being right' scenario. I could double my accuracy right now by decreasing my targets, have I gotten any better? Nope.

[sevensa 10]

I see what you mean, however I think you have to look at accuracy in the context of r/r. The higher the reward, the more difficult the accuracy becomes. i see your train of thought, in that only being correct 20% -a monkey could be right 50% of the time. But all accuracies aren't equal. The reason my accuracy is so low is because i demand such high r/r, not vice-versa. A 50% average accuracy would be easy with different r/r, I simply don't take that way out because I know 35% with 8-10x reward is possible. Could you enter anywhere, in random place and achieve 20% accuracy? Of course, but with with 9x reward, no way. Think about it, if that were the case we would all be rich!

 

Are you sure? Have you tested it? Looks to me that your assumption is that this is your entry points that allow you to have the results you do, but without comparing them against random entries how do you know that they are really better than random? Look at it another way.... If your entry points were really that good, why are they only 20% accurate?

 

I am not sure how you did your backtesting, but this might be an interesting excercise to test your system with random entries with the same risk/reward to see if the results are much different than what you get now.

 

It's been a while since I read the book, but from what I recall in one of Van Tharp's books he showed how even a random entry system was profitable with proper money management and risk/reward. The reason not everyone is doing that might be because not many people will accept 20% accuracy and have the discipline to hold on for the 9x reward.

[jonbig04 10]

Are you sure? Have you tested it? Looks to me that your assumption is that this is your entry points that allow you to have the results you do, but without comparing them against random entries how do you know that they are really better than random?

 

If I could maintain 20% accuracy with 9x risk, entering anywhere we wouldn't be having this conversation because I would be in tahiti on my yacht. As would you, and everyone else on earth. I think you are getting hung up on accuracy, it is only 50% of the equation! Not 60%, or 90% it is 50% of the equation that makes up your expectancy. You have to look at your r/r! this is why i created the accuracy thread. They have to be thought of in context of each other. Without both, nothing can be said.

 

Look at it another way.... If your entry points were really that good, why are they only 20% accurate?

 

Because I'm operating with 9x risk! That was the point of my last post, accuracy becomes more and more difficult the higher your r/r is. That is why you can't look at accuracy alone. Think about it, I could drop my targets by 50% and by accuracy would double. Would that make me or my system any better? No.

 

I am not sure how you did your backtesting, but this might be an interesting excercise to test your system with random entries with the same risk/reward to see if the results are much different than what you get now.

It's been a while since I read the book, but from what I recall in one of Van Tharp's books he showed how even a random entry system was profitable with proper money management and risk/reward. The reason not everyone is doing that might be because not many people will accept 20% accuracy and have the discipline to hold on for the 9x reward.

 

Once again, if I could enter anywhere and maintain 20% accuracy with 9x risk I would be RICH. Taking 90 trades a day and making millions, think about it. As far as my entry points. Are they good? Well my entries levels are good. By that I mean the 0-2.5 point area I'm entering in. Now my surgical entries at those levels AREN'T good, at thats what I have to work on.

[sevensa 10]

It often seems like people attach their trading ability to accuracy. Its the whole 'being right' scenario. I could double my accuracy right now by decreasing my targets, have I gotten any better? Nope.

 

I wouldn't be so sure that you wouldn't be any better off that way without more investigation. Increasing your accuracy might also increase your expectancy and smooth out your equity curve. A smoother equity curve and higher expectancy will allow you to trade a bigger number of contracts for similar risk by increasing contracts, which will increase your overall profit. With higher profit targets, your average trade might be $2, but with a lower profit target, higher expectancy and smoother equity curve, you might be able to trade 2 contracts for similar risk as in the first scenario and earn $1.5 per contract, resulting in $3 total profit per trade.

 

Not to sound like I am picking on you today, but this appears that you are making a couple of assumptions and believe them to be correct without really running the numbers to verify that they are really correct.

[sevensa 10]

If I could maintain 20% accuracy with 9x risk, entering anywhere we wouldn't be having this conversation because I would be in tahiti on my yacht. As would you, and everyone else on earth. I think you are getting hung up on accuracy, it is only 50% of the equation! Not 60%, or 90% it is 50% of the equation that makes up your expectancy. You have to look at your r/r! this is why i created the accuracy thread. They have to be thought of in context of each other. Without both, nothing can be said.

 

 

 

Because I'm operating with 9x risk! That was the point of my last post, accuracy becomes more and more difficult the higher your r/r is. That is why you can't look at accuracy alone. Think about it, I could drop my targets by 50% and by accuracy would double. Would that make me or my system any better? No.

 

 

 

Once again, if I could enter anywhere and maintain 20% accuracy with 9x risk I would be RICH. Taking 90 trades a day and making millions, think about it. As far as my entry points. Are they good? Well my entries levels are good. By that I mean the 0-2.5 point area I'm entering in. Now my surgical entries at those levels AREN'T good, at thats what I have to work on.

 

Good luck in your trading and search for better entry points. I wish you the best.

[jonbig04 10]

I wouldn't be so sure that you wouldn't be any better off that way without more investigation. Increasing your accuracy might also increase your expectancy and smooth out your equity curve. A smoother equity curve and higher expectancy will allow you to trade a bigger number of contracts for similar risk by increasing contracts, which will increase your overall profit. With higher profit targets, your average trade might be $2, but with a lower profit target, higher expectancy and smoother equity curve, you might be able to trade 2 contracts for similar risk as in the first scenario and earn $1.5 per contract, resulting in $3 total profit per trade.

 

Not to sound like I am picking on you today, but this appears that you are making a couple of assumptions and believe them to be correct without really running the numbers to verify that they are really correct.

 

I see your point about the equity curve. I know I would be less profitable with smaller targets, but you're right in that they aren't that far off. The reason I haven't bothered is because I have my R/R where I want it, now I just need to increase my accuracy (which hopefully will be done by better entries). Its easier for my to quantify exactly which part I need to work on, rather than just dropping my targets and R/R. To each his own though. Looking at this shitty month ( so far) entries need some help, but if I can ail them down it just might be the last thing I ever have to do lol. I mean look at the level yesterday. Or 5/15, 5/14, 5/13,5/12, and 5/3- all days where I was stopped within 2-4 ticks of the LOD or HOD. With my smallest target at 9ES, you can see why I want to better my entries on the 5-sec. If that makes sense. I appreciate the input, I really do. But I don't think that lowering r/r is the issue. I dont think my levels are the issue (though they suck sometimes), but rather I think the problem lies in the small risk (1 point stop) and nailing just the right point.

[jonbig04 10]

took some stops, using some re-entry rules hence the second try

[jonbig04 10]

looks like I've missed out on 49 net ES points in the last 3 weeks due to my crappy entries. maybe I need to fix them aye? I've decided there is probably no easy way (eg stop increases or more tries). I think I just need to become more adept at following the 5 sec chart. I've taken 22 trades in the last 3 weeks and 7 of them were within .25-1.25 points (most were 2 or 3 ticks) from the HOD or LOD. I don't think that's coincidence and I don't expect to take advantage of the whole 49ES, but obviously that many shouldn't get away. If I can nail these entries...well I think that's my final battle. I attached a pdf of the 7 LOD/HOD trades.

[sevensa 10]

looks like I've missed out on 49 net ES points in the last 3 weeks due to my crappy entries. maybe I need to fix them aye? I've decided there is probably no easy way (eg stop increases or more tries). I think I just need to become more adept at following the 5 sec chart. I've taken 22 trades in the last 3 weeks and 7 of them were within .25-1.25 points (most were 2 or 3 ticks) from the HOD or LOD. I don't think that's coincidence and I don't expect to take advantage of the whole 49ES, but obviously that many shouldn't get away. If I can nail these entries...well I think that's my final battle. I attached a pdf of the 7 LOD/HOD trades.

 

Looks to me that if you have waited to get to your resistance/support area and entered one tick below (for shorts)/above (for longs) the low/high of the previous bar and keep adjusting it one tick below/above the previous bar until filled, that most of the 7 trades would have worked.

[jonbig04 10]

Thats interesting, I usually enter via the 5 sec, but I will definitely check t hat out, thanks. I'm putting together like 50 of these so I can get a good idea of what works and doesn't.

[jonbig04 10]

...............................................................................

[AgeKay 10]

Looks to me that if you have waited to get to your resistance/support area and entered one tick below (for shorts)/above (for longs) the low/high of the previous bar and keep adjusting it one tick below/above the previous bar until filled, that most of the 7 trades would have worked.

 

Agree. Price action is about seeing what happens at the S/R at the point in time price approaches it and then reacting to it not just blindly entering your limit order and waiting for stuff to happen, which I have the impression you seem to do, Jon.

[jonbig04 10]

Agree. Price action is about seeing what happens at the S/R at the point in time price approaches it and then reacting to it not just blindly entering your limit order and waiting for stuff to happen, which I have the impression you seem to do, Jon.

 

Price action is about the action of price, it doesn't really have anything to do with whether you wait for entry confirmation or not. There's nothing wrong with entering without confirmation, that's how you get the best fill. If you want to wait for X to happen at S/R than that's cool too, but it has nothing to do with whether you used P/A to determine the S/R in the first place.

[jonbig04 10]

I will be exploring various options this weekend about my entries and will post my results. As I said before though, I have a suspicion there isn't going to be an easy way to do this. It may just take a lot of screen time.

[jonbig04 10]

Also, it may have more to do with S/R than it does the 5 sec chart.

[MidKnight 12]

It seems you guys are talking about different things. Jon seems to be talking about using PA from historical data to determine his levels, whereas you guys are talking about using PA to time an entry when it is at those levels. I don't think Jon is doing that, at least not the way some of us might....

 

Jon - here is a question for you. You have done lots of testing and after each time your post with $ signs in your eyes about how much money you made from the test run. Then you start to walk it forward in RT and the results don't match the test run - have you noticed that? So, why doesn't it match? Have a think about that.....

 

With kind regards,

MK

[jonbig04 10]

It seems you guys are talking about different things. Jon seems to be talking about using PA from historical data to determine his levels, whereas you guys are talking about using PA to time an entry when it is at those levels. I don't think Jon is doing that, at least not the way some of us might....

 

Jon - here is a question for you. You have done lots of testing and after each time your post with $ signs in your eyes about how much money you made from the test run. Then you start to walk it forward in RT and the results don't match the test run - have you noticed that? So, why doesn't it match? Have a think about that.....

 

With kind regards,

MK

 

Usually the results do match, with the possible exception of this month (remains to be seen). So far, I am off track by one of those 3 trades I missed by 2 ticks each. If any one of them had worked I would be right where I want to be, so hopefully I can pull it together next week. You're right though, back testing PA is too difficult, takes too long. The real test is in real time. So lets consider this month my first forward test. So far, results suck, I think I'm up +5ES or so. but I'm not keeping track that much yet. Anyways my goal is 20-30. Cool thing about r/r is that's basically 2 good trades. We'll see how next week goes. If I don't pull it off, well I know where the weak point is: entries. With 40 something ES points lost to entries that were off by 2-4 ticks, I think I can safely say I'm close. Agree?

[MidKnight 12]

 

Adjusting stops and targets is an easy way to curve fit any system. Best way to evaluate is to compare to random as was suggested earlier....

 

Just my 2 cents. Enjoy the journey!

 

All my best,

MK

[jonbig04 10]

yea thats true, Im through adjusting for the most part, its simply not going to make that big of a difference (though I may do some profit curve stuff). entries are what im gonna work on now, and like I said I dont think its a matter of stop size, just screen time on the 5 sec