[MidKnight]

Originally Posted by thalestrader »

....I conceive of RR in terms of where S/R is in relation to my entry. Yes, MidK, S/R is history, but markets, like humans, have memory, and quite often (more often than not) that history has meaning and relevance to the present. ...

Hiya Thales,

I wasn't sure if you read my first post fully just because it looks like you may be implying that I was talking down the importance of S/R....If that somehow came through, then it couldn't be further from the truth as S/R has been paramount in my trading for at least the last 3-4 years and continues to be today.

Now my comments about R/R are maybe not so nice I guess why I bring it up is I know a guy that is basically position trading currencies on an EOD basis and he comes up with these 10:1 R/R scenarios for his trade ideas which to me has virtually no relevance. Most people seem to do this when talk about R/R. I can do the same with my trading here and say that trade XYZ is good because it has a 10:1 R/R. My point is I can make up a big reward value that has no reality behind it other than a divine projection about the future. It's hard enough to get it right with just long, short, or sidelines let alone getting it right how far it will go - hehe. It's meaningless to quote on its own - that is all I was getting at. I find it a useful stat based on past trade log data when used in conjunction with other stats, but on its own, as we often see it touted in books I see little value to it.

I'm a huge fan of your every trade starts a scalp idea, but because of my timezone it makes it difficult to implement without going completely into a graveyard shift. I also lack the skills to execute this consistently, unfortunately -- but I continue to work on it

With kind regards,
MK

[daedalus]

Thanks for all the positive input gentleman.

I have been playing around with all sorts of things, doing more backtesting, and coming up with some ideas and shooting others down.

One of the things that I came back to this week was a thread started by edabreu on here. Its here: http://www.traderslaboratory.com/for...thod-6848.html if you need to check it out (and I highly recommend it!). But the thing that has stuck with me is a quote from his blog...

"Once you accept the fact that intraday trading is about statistical probability of the immediate future, and accept the fact that the immediate is often just the next price bar, then all trading becomes a focus on making money. If you can concentrate on just making money each time you enter a trade, and make your decisions focused on capitol preservation, then all decisions become easy." -Ed Abreu

I think this quote kind of captures the essence of what i'm trying to exploit here or at least challenge. I've put so much time and effort into trying to predict where the market is going to move to in broad terms that maybe i've missed the point... that what I should focus on is the immediate future because thats where our best edge lies.

And maybe this "scalp" method is actually a full fledged method in disguise if more contracts were added and traded in a edabreau fashion of locking in the quick initial profit and then letting the other half ride for big gains.

Anyway, this probably isn't that coherent as i'm fairly deep into a bottle of kumquat liquor my friend brought me back from greece but hopefully you'll see where i'm going... focusing on what we can predict about that next bar or two and then letting things fall where they may.

Cheers!

[SIUYA]

Daedalus - "focusing on what we can predict about that next bar or two"....

If you believe that markets are basically fractal (without getting into debates about it) then really intraday (or smaller time frame) trading is really just larger time frame trading in fast forward.
Given this invariably by dropping down your time frames (or range bars) then you will naturally scalp. (and then the commission, slippage and spread will become a larger component of a unsuccessful or successful system)
However if you approach the scalping from the point of view of trying to capture the bigger moves but then be prepared to drop down the time frames to improve the entry and exits, then are you scalping, or are you just managing the position you want based on the larger time frame via micro managing? - problem here is that then you may miss the move, you may have lots of small losses to pay for when a bigger move occurs, mentally it may require more focus.... same old issues.

Point is if you are scalping it would appear you should then ignore everything else except the next bar or two. I would suggest then, while many scalpers look to fade markets, and look to go both ways and capture all a market has to give, that a better approach is to look to always go the same way - the one way each time. (an approach TRO mentions) You will still then have ample opportunities, the focus is not confused and unbiased, the rules simple.

[clmacdougall]

Great post Siuya!

I think differently concerning the fractal nature of markets than you do but I really enjoyed your post. I've read Mandelbrot and enjoyed his book. Intraday price movement outside of news releases can be fractal, but somehow the greater time/volume frame involved in a price bar the less trustworthy are the results stemming from it's development. That's just my opinion and I'm open to change. Thanks again for your post, good advice for sure.

[Ciao]

hello
I am new on this forum and as a daytrader/scalper I had to come to this thread first
just realizes that this forum it is for professional trader I am afraid I could be in the wrong place..... beside as I am Italian my English it is worse then my trading.....

I haven't yet read all the posts (will take me too long but I slowly will do it)

after many years of trading and losing then losing less and making more and keep on working and improved it .... I now have acquired my own type of strategy simple and to the point....

Plan-Strategy
Discipline
Psychology
those are my main "tools" .... but I will not tedious you any longer and maybe I am not in the right thread to elaborate further .... so I will stop here for now and go and get familiar with this forum and read some posts (gee I am a slow reader!!! lol)

take care

[TheDude]

Originally Posted by clmacdougall »

Think long and hard about it daedalus. Already tried this concept out, it ruins you psychologically. Had 30 winning trades straight than got nailed on the 31st. It's a pain that's hard to forget. It takes a strange kind of dude to risk like crazy for small profits and then get nailed for a huge loss and keep on stickin to that same plan. Good luck man.

Reminds me of those who think selling naked options is a one way ticket on the gravy train. pinching premium until the inevitable steam roller comes along....

[SIUYA]

something that has been going round in my head - its one of those things that probably has a simple answer but I am stuck in one of those loops.
If you have a system that is 80-90% accurate, then shouldn't the stop loss be quite small? Probably as you are taking small gains without the opportunity of letting them turn into a loss.
Otherwise, is it only 80-90% accurate because you let any losses become quite large until they reverse and then become profits?

A similar question was raised once before, whereby it as asked.... which is better.
The risk of losing $100 3 times, or risking $300 just once......
While mathematics may show out based on expectancy, reality, R:R, etc; etc; I would imagine the real answer may be just in the gut feel and 'comfort' level of the risk taker.

So I guess you need to really look at why its accuracy is so high - what is the expected drawdown before a profit? Will you get stopped out prior to making a profit? are averages a good measure to look at, or absolute maximums..... as they say you biggest drawdown has yet to come.

(I also agree with you Dude - writing options works really well if you approach it from an insurance point of view - using a broad, diverse and conservative portfolio - looking to scalp small gains to build a pot large enough that will not get wiped out by large one of hits. This is extremely hard to do from an individual trading point of view. Directional trading using options is a different approach, and then, why would you sell out of the moneys - a favourite for the steamroller victims.)

[Kiwi]

Siuya,

You need to consider that some entry/worst case stop setups are well suited to a high win rate.

On the other hand a different one might be well suited to getting into a long run but have a low win rate.

There is no better. There is only profit and probability. And personal fit.