CanAussie;
I like Alexander Elders goal posts for a beginner...snippets quoted:
"The minimum acceptable performance level for a beginner is a loss of 10% of trading capital in a year...many lose 10% in a month, if not a week...if you can survive for a year, learn about trading, and lose less than 10%, your education is cheap and you are way ahead of the crowd".
"The goal of a beginner is to cover trading expenses and generate an annual return on his/her account equal to one and a half times the current rate on T-Bills or a comparable riskless instrument (ie. ING Direct)".
Exactly.
Entry may not matter on long trends, but in swing trading, it is at least as important as the exit and has a profound effect on the ultimate expectancy figures.
In fact the exit is defined by the entry.
Actually now that i'm reviewing all of my previous positions i'm seeing that my stops were too tight givven the recent volitility. Should i take this into consideration when taking trades in more volitile markets? Go for stops below/above areas of major support, and only where i get really good bang for the buck?
Cheers,
Hi Tech/A,
Can I ask how one would go about assessing "known" R/R ratios in relation to the trading methodology under consideration?
I assume that the only two options would be either (i) to look back at past trades or (ii) to look at values derived from backtesting.
With option (i), How would this be achieved? For example, on the winning trades, would you look at the price you actually entered and exited together with the original stop level (which obviously hadn't been hit)?
However, with the losing trades, I assume that this could not be calculated as there would be no actual exit (with profit). If this is the case, then assuming that you've had a long run of losing trades, how can the actual average R:R be assessed???
With option (ii), I assume that this would only be possible with a pure mechanical system that you can code. In the case of a discretionary system, IMO this option would not be possible.
Therefore, if you were trading a discretionary system that was currently picking only losing trades, how could this R:R ratio be recorded??
you dont know whether its you, the system, the market etc.
Crude backtesting (i.e. code it up as best as you can) and I keep a total expectancy of all trades, plus moving expectancy of the last x trades to track recent performance.Snake/Wayne and co.
How do you guys work your expectancy (Manually,Test it/Record trades ad hock) and what are an idea of Acceptable numbers for you?
I have no trading plan at all really. If I could plan and record and show discipline I could earn lots working for someone. I trade because I am dysfunctional in paperwork and plans. I hate it. Hate charts, hate spreadsheets, hate balance sheets. I look at all the above though, problems stick out like the proverbial. Can't see any reason to over analyise.
I know I could have made more money if.......... but I cannot believe so many lose money when it has been a period when making money is so easy.
I think a plan will be nesessary when the market is off the boil but at the moment how can one possibly lose?
I do honestly believe if you lose money in this sort of positive climate then perhap a broker would work better.
CanAussie;
I like Alexander Elders goal posts for a beginner...snippets quoted:
"The minimum acceptable performance level for a beginner is a loss of 10% of trading capital in a year...many lose 10% in a month, if not a week...if you can survive for a year, learn about trading, and lose less than 10%, your education is cheap and you are way ahead of the crowd".
"The goal of a beginner is to cover trading expenses and generate an annual return on his/her account equal to one and a half times the current rate on T-Bills or a comparable riskless instrument (ie. ING Direct)".
No need to buy software when you have www.bigcharts.com. and their interactive option. It charts back 20 years. If you confine your backtesting to 10 stocks or less, it does not take much time at all. Keep your expenses low to take the pressure off having to make a return.
Happy some good stuff there.
But this??
Do you mean choose 10 stocks and test them only or use just 10 to design a trading plan/test results etc?
I can see where this is possible with just 10 stocks and a good idea,but if your talking about the whole market based on the above statement---???
they are good quotes asxgorrilla.
Doesnt change the emotional torment of losing money in a bull market though.
...
No need to buy software when you have www.bigcharts.com. and their interactive option. It charts back 20 years. If you confine your backtesting to 10 stocks or less, it does not take much time at all. Keep your expenses low to take the pressure off having to make a return....
Happytrader, I think you may have mentioned some time ago that bigcharts give live pricing in the last couple of hours. If so, do you know if this still available?
Thanks happytrader - I checked it sometime after 2pm today and it was still delayed. Didn't notice the exact time of checking, but could have been before 2.20pm, so will look again on Monday!Hi Sails
Yes its still available for asx stocks at 2.20pm.
Cheers
Happytrader
Unfortunately you need to be able to test it.
You need "significant" numbers ie a large data sample to be able to have confidence.You need to buy and learn the software or hire someone who can test/write it up.To look back and do it manually unfortunately will take years for significant numbers.
Add up every winner
Add up every loser
Add up the capital used in trades
Add up transaction costs.
Add up number of trades.
Then do your averages.
Winners/losers = Winning %
Total profit or loss/into capital used in the trades = $return expectancy.
Losing trades/into winning trades = Expectancy / trade.
There are many more ratio's.
Everything can be coded but agree we are limited to knowledge and software capability (Well I am!).
The losing trades and the nett losses would be deducted from the nett wins.
Happy
In your case yes your correct.
However those learning should be involved in trading which is perhaps a little longer in time,where the equation of having to be right isnt as important.
Its easier to trade a weekly methodology than a daily than a short term method than a day trading method.(If trading in a discretionary manner).---well Ive found.
ASXG
The problem with most traders I would expect.
Snake/Wayne and co.
How do you guys work your expectancy (Manually,Test it/Record trades ad hock) and what are an idea of Acceptable numbers for you?
Missing an opportunity to really prosper in this market sucks...but missing the opportunity to learn and get at least some benefit while its here is even worse. Woulda, coulda, shouldas....we've all got them.
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