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Mechanical System and Pyramiding

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tech/a said:
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(2) must not be trapped in a range over many years unless the buy signal is outside of that range.
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Are you against trading within a range? A problem with blue sky trading (although it's done very well of late) is that you do not know when you are nearing resistance and the support line has been left too far behind to know if it would hold.
 

Latching returns the FIRST occurence of the conditions of the method/system.
In the systems I trade which are generally triggered by higher highs/ breakouts more so than pull backs,the first occurence if the trade ends up a winner the length of trend will be greatest from the initial trigger.
 
CFD said:
Are you against trading within a range? A problem with blue sky trading (although it's done very well of late) is that you do not know when you are nearing resistance and the support line has been left too far behind to know if it would hold.
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No not at all.
Can be highly profitable.
Works very well with futures.

This form of trading is more about frequency of winning trades than R/R of a longer term trend folowing method which relys more on R/R than Win ratio.
 
Wow, great thread guys.
Lots of good info here.

Iv just finished reading Way of the Turtle as well. Some good info there about systems testing and design.

In the case of a mechanical system, surely by not taking every trade identified by the system in question, then you are in fact adding some discretionary element to it which could impact on its expected performance?
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Tech's response to this is almost a carbon copy of what i tell my mates about why i just spent $1520 on tradesim enterprise.

And on another note -- I wander how many of the 95-97% of losing traders have tradesim enterprise? Its a very powerful tool. Serious tools for serious traders.
 


Software may not = Success.
Like most things only as good as the driver!
 
To those that do pyramid, when it comes to either pyramiding a position, or opening a new position, which one do you prefer?

Ie. if 2 entries are triggered on a given day, one a pyramid, and the other, another code, which one do you go for?

Also -- this will have implication for portfolio limits which I have started another thread for.
 
Depends (for me) how mature a trend is and how long I have been holding the first purchase.If not long I would probably choose the open position if it was trading strongly in my favor.

If not or a more mature trade then I would look for the one (Eyeball) which I feel had best "Bang for Buck"---likely to bounce into profit.

Again go back to my comments on Montecarlo testing--
 
I prefer to allow money management to have a great influence in decisions.
ie using a 2% risk per trade, if the R/R is still showing a 2% risk when a second buy(sell) signal comes up on the same trade then let it pass. (You can not say a 4% risk on the same stock has not increased the risk). If the R/R has reduced to 0 or gone positive when a second buy(sell) signal comes up then take it. If the R/R is showing a !% risk, the only enter the second trade with an extra 1% risk.
 
You can not say a 4% risk on the same stock has not increased the risk
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Err well yes I can.
If I risk 2% on each trade then 2 trades x 2% = 4% I'm no worse off than taking another trade.

There are a zillion ways to handle risk allocation on a pyramid trade to ensure risk is not increased.
The whole idea is to maximise R/R and minimising initial risk goes a long way in maximising return to risk.
 
You have concentrated your risk, which increases it. Which is not to say at times the risk does not eventuate and you have a better R/R as a result.
 
zillion ways to handle risk
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If I have a 2% stop on the trade taken as a pyramid and leave the stop on the original trade.
Then I havent concentrated risk.
 
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