Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

jperl

Trading with Market Statistics VI. Scaling In and Risk Tolerance

Recommended Posts

It's in the first sets of videos. It is even in the ones where he introduces standard deviation.

 

Well it's been some years since I watched the videos or read the threads (though at the time I did many times), I am pretty sure that they do not advocate using the PVP as a stop. I may be mistaken, it would not be the first time. Perhaps re-read Jerrys first few posts in this thread, again my whole understanding from them is to get away from thinking of 'stops' (apart from emergency and account sized based ones) and start thinking about risk and scaling (adding to a position) or reversing.

 

If the PvP 'jumps' due to a new high volume point forming and the skew changes a newbie should exit, is that what you mean? That is a little different to a stop. My understanding is the modal point (pvp) is a low probability place to consider these actions.

 

Edit: Are you talking about http://www.traderslaboratory.com/forums/attachments/6/2044d1185246572-trading-market-statistics-iv-standard-deviation-eslongjuly23.swf ? How far in?

Edited by BlowFish

Share this post


Link to post
Share on other sites
Well it's been some years since I watched the videos or read the threads (though at the time I did many times), I am pretty sure that they do not advocate using the PVP as a stop. I may be mistaken, it would not be the first time. Perhaps re-read Jerrys first few posts in this thread, again my whole understanding from them is to get away from thinking of 'stops' (apart from emergency and account sized based ones) and start thinking about risk and scaling (adding to a position) or reversing.

 

If the PvP 'jumps' due to a new high volume point forming and the skew changes a newbie should exit, is that what you mean? That is a little different to a stop. My understanding is the modal point (pvp) is a low probability place to consider these actions.

 

Edit: Are you talking about http://www.traderslaboratory.com/forums/attachments/6/2044d1185246572-trading-market-statistics-iv-standard-deviation-eslongjuly23.swf ? How far in?

 

 

 

at the first videos... he will recommend a initial STOP loss below/above the PVP...

Share this post


Link to post
Share on other sites
Good show on the computation dbntina and your analysis of the outcomes for various trades.

As far as risk/reward, think of it as how much does it realy hurt if it only represents 2% of your entire account vs. how much you are hurting if you take multiple stoplosses. To get stopped out in the scenario that is described, the market would have to move 3 SD without a rotation against the skew. You can avoid a chunk of that by not taking trades at the 2nd SD, expecting a move to the 3rd SD, not a high probability trade.

 

 

since probability is decreasing over deviations..... does it make sense to scale out ????? for example... starting with 3 lots at the vwap and scaling out off untill price reached the last st. dev? (talking about directional skew trades only)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.