This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

Positive expectancy & Discretionary trades


I think it was meant to be read as rookie "pro athlete". It simply means being an athlete is his/her profession. Like NBA players fresh out of universities.

But I think I see where TH is coming from... there are steps that must be taken in order.

1. Read market
2. Play with small money
3. Deal with psychology issues with real money
4. Deal with more and more money

Taking these steps out of order, while possibly more exciting, may not always be the best for learning.
 
Sam,

Is it not possible to be a 'rookie' at the next level? I find it hard to give decent analogies to trading due to it's uniqueness.
 
Well it would seem to be a common form of entry into this game. Though for many reasons you don't see a lot of them surviving. Taking it as probable that most are under funded and don't stick to correct risk levels anyway adding to the mix that you are hoping to survive a less than perfect "education" is just another handicap. Its 'do able' of course but surely the most expensive form of education, in $ terms and physiological terms. Lots can come back from the $ damage. Few can shake the hit to the head. :bloated:

Why does a rookie pro athlete get nervous before his first big game? Positive expectancy doesn't guarantee success anyway.
Actually thats a classic example of backing up my approach not yours. How long has the rookie spent in a non-threatening simulation by the time she takes her first step onto the pro field? From what I know of pro athletes about 10 to 15 years!! Close to 75% of their life at that stage. Take a footballer for example from the age of under 10 you start playing to build skills gradually increasing task difficulty, from play to school to junior comp etc, and performance pressure from doing it purely as fun to increasingly becoming goal orientated, making the junior starting side, to making the state squad etc.

So by the time you step up against the pros, mostly around the age of 20, for the first time you already have all/most of the skills. The last step is to put them together with "the psychology that comes with winning and losing".

For some reason what makes sense in ever other field but happily gets thrown out the door in the rush to own the :car:
 
Sam,

Is it not possible to be a 'rookie' at the next level? I find it hard to give decent analogies to trading due to it's uniqueness.

Well, good question. Being a rookie and being nervous are 2 different things though, and imo I don't believe there is a reason to be nervous, more so in the example of trading, with sports and athletes etc some might even approach it with confidence. But anyway, interesting topic, lets get back to reviewing
 

I understand that, but the only way to learn to handle trading real money is to trade real money. Sim trading doesn't prepare us for that. I wouldn't recommend jumping in the deep end and trading the full amount, but starting smaller and working up to it.

So you recommended that first? Here's yet again another perfect example of that method,

No, I didin't.

Actually thats a classic example of backing up my approach not yours.

I didn't state an approach, you just assumed I did (note - you haven't yet made a correct assumption about me, at least none that I've read . The only reason I posted was to point out that while sim trading was a very useful tool, it doesn't prepare people for the psychology of real trading. This suggests that I actually agree with "your" approach, that going from sim trading to trading real money at the full amount is a poor idea. Highest chance of success is starting small, slow and steady, building skill and confidence. We don't see athletes turning pro after 6 months of experience.

If you want to hear the approach I'd suggest for the sake of clarity, it would be to sim trading, watching the market and develop methods. After methods have been developed and confidence is high, move to real trading for a fraction of the full amount. Increase the amounts at a comfortable rate.

However, that does not guarantee success, as many people just can't tolerate variance. We can prepare and prepare, but at the end of the day we're subject to our own limits.

It seemed to me that you were suggesting that anyone who experiences emotion has not prepared correctly. All of us are emotional, it's just a matter of how much, or how well we control it. If you're suggesting preparation is all we need, talk to an athlete of the highs and lows, the slumps, focus etc. There's plenty of emotion flying around in trading, and it shouldn't be assumed that person just lacked preparation.

Forgive me here, but I have never seen a "rookie pro".

You have seen plenty of rookie pros - any pro in the first year is a rookie. Rookie doesn't mean professional or not professional, just new to that level.
 
(note - you haven't yet made a correct assumption about me, at least none that I've read .
I don't have to assume. I already know you can do it all easily. You told us all about it, just haven't shown us

It seemed to me that you were suggesting that anyone who experiences emotion has not prepared correctly.
Not true at all. I've always said that this game isn't about being an ICE man controlling your emotions nor the victims favorite excuse, discipline!!!!! Those that go on about that stuff just happen to also be the least prepared with skills. If they had skills that they could take to market and on balance win more than loose the emotional game becomes a million miles away from the BS you hear the punters sprout on forums and the like.
 
f they had skills that they could take to market and on balance win more than loose the emotional game becomes a million miles away from the BS you hear the punters sprout on forums and the like.

You're right, but it's mental skill that is lacking, and some may never have enough of it. We all have different levels of mental strength, and training will affect us differently. Some may develop quickly and become quite strong, while others may learn slowly, and others not at all, or be limited to a low level.

I still think that much of the mental aspect of trading requires experience trading real money. Trading real money doesn't have to be "serious" immediately, like I've said previously, I think starting with a fraction and working up is a safer way to develop control and tolerance. I jumped in the deep end, but then I know this works well for me I can cope with it. I'd never suggest it to anyone else.
 
Thanks for your thoughts. I forgot to mention funding in my question being that of well funded.

Well, good question. Being a rookie and being nervous are 2 different things though, and imo I don't believe there is a reason to be nervous, more so in the example of trading, with sports and athletes etc some might even approach it with confidence.
Yes, that's why I asked TH the question above.

Yes interesting topic, I agree.
 

Yes, but a lot of rookies are nervous, because it's the moment of truth. Their skills haven't been properly tested at their level, and they wonder how they will measure up. It isn't quite the same with traders because they already know how their skill stacks up before they go live, but it doesn't mean nerves don't apply. Anyway, I think TH was talking about stronger emotions than typical first-time jitters.
 
I followed tech/a advise from the Technical Analysis - Smoke & Mirrors? thread and looked up positive expectancy and thus found this online calculator that seems to do the job.

http://www.stockresearchpro.com/an-expectancy-calculator-to-monitor-forex-trading-strategies

And since i just finished imputing all my trades over the last 3 and a bit years into my expensive new stator software...thought it was probably worth while finding out what my expectancy is, and since im a discretionary punter though this thread was appropriate.

I'm guessing 20+% is pretty good?
~
 

Attachments

  • expectancy.JPG
    70.2 KB · Views: 7

20% is very good.
But your losing trades are nearly twice the size of your winning trades.
Your bottom line would increase considerably with even a slight decrease in your losing trade size.

STATOR should print out all the stats you need if you've input everything.
 

Stator is putting out lots of stats but i haven't come across an expectancy stats yet...still learning how to drive it.

I think there's scope for me to reduce my average loser size as its inflated by 2 particularity large losers that i seriously doubt i could let happen again....on the other hand there's also scope for my winners to losers ratio to pull back a little as i have to admit im finding easy winners harder to come by over the last 6 months and i have cut some winners to cover my losers and that's probably inflated my win/loss ratio.

-----------------------------

Would be nice if some others could post up there expectancy.
 
Last 2 mths only trading the FTSE Futures
Only one contract a discretionary method which to be honest is based on VSA clear buy and sell. I usually set a buy and when triggered a sell (Short or long) and go do something else---walk/tea/TV.

I close out before I go to bed if not already closed before Which I am now.
Values are in Pounds = $1.68.

Will get serious one day but great interest and fun.
Could refine much more but enjoy my own time at the expense of some profit and loss.
I like to shorten the risk by moving the stop up if Im watching if not its is no more than 10 pips wide if I cant get a trade under that then I wont take it.
Blah blah.
 

Attachments

  • Expectancy 1.gif
    5.1 KB · Views: 139
fantastic and thank-you.

These bits of information are gems and I hope one day I will understand.

Cheers
 
Above winning and losing trades are in very small dollar amounts. Are these net of brokerage? Even then, is it really worth your trouble to bother with a couple of hundred dollars?
 
Above winning and losing trades are in very small dollar amounts. Are these net of brokerage? Even then, is it really worth your trouble to bother with a couple of hundred dollars?

Not sure if your comments are directed at me or tech...perhaps both?

As for me the stats are closed trades only and im assuming Stator (the software that produced to numbers) has taken out brokerage :dunno: so its 40 winners averaging $501 = $20040 not a fortune but certainly better than a kick in the nuts. Must be a nice feeling to have some serious money hey Julia.

As for tech...from what i understand of high frequency trend following, its quite common to have many small winners...also the position sizing tends to be small per trade due to risk management, my position sizing is closer to 10% than 2% (another reason my losers can be large)
 
Hi So Cynical, yes, I was thinking about both you and Tech with my question.
But it was not meant in any way to not give you due credit for what you're doing. Just seems to me that if you produce a decent result, you might as well do it with a few more dollars, and so your overall capital keeps growing at a faster rate.

But you know your limitations, and you know whether or not you're comfortable with leverage to increase your profits.

That's all I was wondering about. Absolutely not being critical, and my apologies if my question came over that way.
 

2% is on risk per trade, not position size. Depending distance between entry and the stop, 2% risk could be anything between 10% to 100% of capital.

Above winning and losing trades are in very small dollar amounts. Are these net of brokerage? Even then, is it really worth your trouble to bother with a couple of hundred dollars?

Looking at expectancy alone doesn't answer whether a strategy is worthwhile or not... there are many variables yet.

The key variable is trade frequency. If the strategy only brings out opportunities 50 times over 3 years then a few hundred bucks will be nice pocket money but probably not sustain a full time income. If the strategy works 50 times a month ... then it begains to have some legs.

The other issue is scalability - which may be close to infinite on FX to $10-12K limit on small, illiquid speculative penny shares.
 
Above winning and losing trades are in very small dollar amounts. Are these net of brokerage? Even then, is it really worth your trouble to bother with a couple of hundred dollars?

that still works out to be a roughly $3K a month in tech's case(assuming it's before brokerage). That could be easily scaled up to 5 times that size without even breaking a sweat trying to fill an order.

Not a bad little hobby if you ask me
 
I'm actually live trade testing a few ideas of my own coupled with VSA.
Its not something I myself am talented enough to code up and test.
Im using 9 min charts so I dont have the data at my disposal.

It really is only pocket money as pointed out but I could and if all works out well---will trade multiple contracts.
Which then brings in all sorts of possibilities like adding and subtracting contracts as you trade a move.

The point is that there are multiple trades which give a blueprint of how your discretionary trading is performing.
We can look at frequency (in my case) drawdown in Cynicals case and a host of other things----once we have the information----we are creating our OWN data..
 
Cookies are required to use this site. You must accept them to continue using the site. Learn more...