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brownsfan019

Measuring Strength of a Move Once in a Trade

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perfect risk managment strategy,,,

 

Grey1

Actually 'staying' with a third is only perfect "risk management strategy" ::helloooo: for a small subset of systems, good "risk management strategy" for another set of systems, at B.E. for another subset of systems, and disastrous for a sizable subset of systems.

 

More would definitely see the ridiculousness of just throwing up a post like

“The perfect risk managment strategy is to just take three ticks off every entry”

than would see the ridiculousness of

“exit two thirds of my position and let the other third run, and run, and run....”

but they are equally ridiculous as general advice!

 

...not criticizing your posts and intentions in general - just beating the drum some more from my recent posts for TL posters to abstain from discussing exits in isolation from the system behind it... it may seem like it helps others but it doesn't... and it's ET like...

Edited by zdo

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I'll say this on runners - they've NEVER worked for me. I'm all-in or all-out. That's just what works for me.

 

+1. I can never rationalize the total Risk : Reward variance in scaling out positions vs. a full stop out... but thats just my personal preference.

 

All in all out forces me to hold trades and stay accountable to my proper exits.

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I'm with zdo. It depends:

- what you are trading

- what your entry strategy is

- what moves you are trying to capture

 

My personal approach is to test each exit separately. If you then find that the pf on a quick exit is 2+ with a 60% win and the pf on a trailing or trailing+tightening exit is 2+ with a 30-40% win you might choose to combine them to give a result that:

- has an averaged profit factor

- has a smoothed return (and thus all the resulting system stats).

 

Or you might not find that. But only testing will tell. Generally I think the heuristic that the market rewards you for doing what is hard is true ... but ones personal psychology might combine with hard to generate unprofitable in some cases which could also argue for a staged exit.

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Actually 'staying' with a third is only perfect "risk management strategy" ::helloooo: for a small subset of systems, good "risk management strategy" for another set of systems, at B.E. for another subset of systems, and disastrous for a sizable subset of systems.

 

More would definitely see the ridiculousness of just throwing up a post like

“The perfect risk managment strategy is to just take three ticks off every entry”

than would see the ridiculousness of

“exit two thirds of my position and let the other third run, and run, and run....”

but they are equally ridiculous as general advice!

 

...not criticizing your posts and intentions in general - just beating the drum some more from my recent posts for TL posters to abstain from discussing exits in isolation from the system behind it... it may seem like it helps others but it doesn't... and it's ET like...

 

you obviously are new to this game,,,very new it seems.. get yourself a Neural net and keep all your inputs constant and optimise your out put ( exit) .. once done that then go back and edit your post above

 

Grey1

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yes....sorry about the ridiculous advice....I was not specific enough.

While I may take two thirds off and run the last third, it still carries a stop as well. Its just that it does not have a take profit level.

If you view that there are generally three levels/ways to exit, a stop with a loss, a stop with a profit, and a take profit level. I may enter a trade - use a take profit for two thirds of my position, and let the last third run until it is stopped out, by a trailing stop.

For me this actually has noting to do with risk management - thats factored in with the actual reason for taking a trade, the position sizing and stop settings etc;

This is more a physc thing that works for me, and works for when I believe the trade can be a real trender. It allows me to combine both short term trading and longer term trend trades.

Given the thread is about measuring the strength of the move, I hope it would add to the discussion.... basically in that by letting the move occur and me being a part of it without me trying to measure it or judge it allows me to stay on some big moves. I just let the stop take me out, not a profit target.

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+1. I can never rationalize the total Risk : Reward variance in scaling out positions vs. a full stop out... but thats just my personal preference.

 

All in all out forces me to hold trades and stay accountable to my proper exits.

 

There are millions of combinations in scaling out of pos which affects the final P/L out come but one can simulate the out come using Monta carlo ( assuming randon walk as a strategy for simplicity ONLY) and ATR as a means of measuring P/L for both stop and traget to find a reasonable risk managment strategy ,, The best tool I suggest is to optimise using a Genetic adaptive NN

 

Grey1

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grey1, " assuming randon walk as a strategy" ???????????????

... hopefully the noobies, including the quant noobies, perked their ears up on that one after the scent went straight to their hindbrains...

 

My naivite' astounds me

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grey1, " assuming randon walk as a strategy" ???????????????

... hopefully the noobies, including the quant noobies, perked their ears up on that one after the scent went straight to their hindbrains...

 

My naivite' astounds me

 

If I was you I would use a more techncial approach to reply to my posts .. We never get any where if you come up with statement as above ,, they are neither constructive nor mathematical ..

 

Grey1

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Like I said, it's a mental game I play w/ myself regularly - the 'what if' game... What if I stayed in all day and just MOC'd. the trade. Then the next day - good thing I got out when I did!

 

Got a few ideas working here, but it's all rudimentary at this point. In the end, my gut says that to just keep doing what I am doing and be happy.

 

Thanks for the feedback everyone. While the exit holy grail probably doesn't exist, sometimes I need to get a thread like this going to reinforce what I've been doing is not half bad.

 

;)

 

bf, sounds like you may be done with this thread but I’ll make a few more comments about the ‘stay - no stay’ decisions that traders must make all the time. Most systems should not have any ‘stay’ type exits, and per system, exits should be target (fixed or % of margin or… etc.), PA, trailing (via 'trend'lines see below or other trailing stop methods) or some combo. The dissonance from missing the occasional great move is part of it – hence your “be happy”. Also, some systems should have a mix of ‘stay’ and ‘no stay’ exits.

 

The main point of all my posts in this thread is that the exit methodology must be matched as precisely as possible with the system itself. Most systems are designed to play for points and that is what they should do via ‘no stay’ exits and they are as you say “not half bad””. Joe Montana had no long ball and he played for points, but he turned sub 30 yard throws into super, etc.

 

A very few systems are ‘stay’ unconditionally period and the number of traders who are sufficiently ‘comfortable’ with systems that reward ‘stay’ unconditionally (with the ‘trend’ btw) is also small. These systems play for position, not points. With full ‘stay’ systems “ … the most important aspect of any trading decision is never the condition of the market, but rather that of your own position. The trick is to be constantly moving toward a position of strength, both within an individual trade and within the marketplace at large. Just like basketball, chess, or any other activity that requires focus, you know you’re in the ‘zone’ of trading when you start playing for position, not for points.” Jonathan Hoenig, CapitalistPig

 

Personally, I can make very good money 'scalping', a little bit of money swinging, sporadically good money breakout trading - but my really homerun years were when I had (just barely) enough stones to ‘stay’ and the seasonal / trend went parabolic. It has taken me nearly 20 years of work to really accept / assimilate / accomodate / routinely include this way of trading as my nature is more suited to ‘start clicking them in and then start clicking them out’. And, btw, this system is still not ‘trend’ trading proper – I still got a ways to go before I’m ready for real trend trading. :(:roll eyes:

 

re the lines... Am currently starting to build a short position in the indexes and as previously discussed will use the right most line (see attached) to determine my ‘stay’. It should be noted that the right most ‘live’ line is extremely mutable - I have changed its angle 3 times in as many days on this half day chart and it may be considerably steeper by Monday. I would not be surprised or disappointed if most of the position is stopped out at the green line and look forward to putting more on at a higher level. I would also not be surprised if this ‘collectively inevitable’ next leg / crash down doesn’t analogue typically (in ndx/usd terms at least), but I do want to be positioned for the possibility.

 

To review - the optimum exit methodology is determined by the system itself. Your bringing up the topic may indicate a need for just a tiny tweak to your exits rather than a need to make a big shift along the ‘stay – no stay’ continuum… hth Have a great weekend all.

StayLines090925AM.thumb.jpg.7ac2427ccaa0e13598f573efbdeca82a.jpg

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Tams - just looking for some ideas, maybe something will spark an idea on my end. I'm not averse to indicators, but prefer to have 'cleaner' charts. To each his own though.

 

 

actually I wanted to tell you all you need is to watch the volume...

but knowing your aversion to the value of volume analysis, I gave you the next best thing.

 

 

 

p.s. channels help too.

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actually I wanted to tell you all you need is to watch the volume...

but knowing your aversion to the value of volume analysis, I gave you the next best thing.

p.s. channels help too.

 

I appreciate the assistance. When I find something that shows how to use volume w/ a consistent result, I'll consider it. Till then, I'm going to have to accept it as is b/c I'm sure not going to be drawing crazy lines all over my charts or coloring different stacks of volume with crazy lines on those as well... ;)

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bf,

fwiw, I'm 'bloggin' - not specifically about "Measuring Strength of a Move Once in a Trade"

but about whether and how to 'stay' or 'no stay' once in a trade...

It doesn't use volume but unfortunately it does have lines - but only one active line at any given time.

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I appreciate the assistance. When I find something that shows how to use volume w/ a consistent result, I'll consider it. Till then, I'm going to have to accept it as is b/c I'm sure not going to be drawing crazy lines all over my charts or coloring different stacks of volume with crazy lines on those as well... ;)

 

 

there are more than one way to skin a cat... I won't suggest you to sweat it.

 

 

.

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BF surrendering to indicators ??? my, the World must be changing.

 

 

Here's a little "indicator" that might help:

 

set the look back to 2 bars,

if the price never closed beyond the 2 bars, there is really no reason to exit.

(of course you have to tune to a resolution that does not give you the noise,

or increase the "look back" so that you don't get taken out by a spike)

 

http://www.traderslaboratory.com/forums/f46/scalpers-hl-bracket-sound-6084.html'>http://www.traderslaboratory.com/forums/f46/scalpers-hl-bracket-sound-6084.html

 

11041d1243739733-scalpers-hl-bracket-sound-scalper_hl_bracket.jpg

 

 

Hope the idea helps

 

http://www.traderslaboratory.com/forums/f46/scalpers-hl-bracket-sound-6084.html

Tam

 

Have you got an mt4 version of this Indicatore available

 

 

Barry

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I use a market internal display that gives read out of advance decline and Volume

of NYSE and NASDAQ also measures the amount of ticks and I can tell by tracking these numbers if market is getting stronger or weaker.

It was written in spreadsheet and it tracks live

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I use a market internal display that gives read out of advance decline and Volume

of NYSE and NASDAQ also measures the amount of ticks and I can tell by tracking these numbers if market is getting stronger or weaker.

It was written in spreadsheet and it tracks live

 

Care to share some examples of this?

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