Win rate increased to increase average win amount - can it be done?

[It's Snake Pliskin]

I had a moment of clarity and thought a small discussion could be had. Though I may not be thinking clearly due to fatigue.

Can the win percentage be increased along with the average win amount vs average loss amount?

So where we had a positive expectancy with fewer wins than losses but with a higher average win amount, could the same average win amount stay the same or even be higher with a higher win percentage? Can it be done?

Feel free to elaborate away.

 

[Nick Radge]

I'll preface by saying that anything can be done and is possible, but the usual relationship with these two works inverse from my experience.

When they do work together its usually because of curve fitting or data mining.

 

[theasxgorilla]

When they do work together its usually because of curve fitting or data mining.

And for mine, curve fitting can occur in the ultimate walk forward test, ie. hard-right-edge of the chart, unbeknowst to the fitter, until they don't, fit.

Sorry, I finally got around to reading Nassim Taleb's, Fooled by Randomness.

 

[bowman]

I'm in the early stages of trying to analyse the one day performance of mining stocks that gap up - either driven by an announcement or not.

I'm looking for meaningful statistics in the relationship between a number of factors, including the % of the initial gap up, the intraday high, low and close prices, and the nature of the stocks trend prior to the gap up.

In other words I'm trying to find gap up stocks that have the highest probability of a positive outcome when buying into the gap.

For example on the 10th Sept, EMU gapped up 75% from a pullback while trending up, with no news, but then only made another 5% gains before it retraced and then closed below the gap up price.

Conversely on the 11th Sept, ADN gapped up 21% from a previous trending high, on an announcement, and then went on to make a further 27.5% gains before settling back to finish even on the day.

When I analyse 100 stocks, I'll see if I can devise some intraday trading rules for entry/stop loss/exit for these gap up situations.

 

[kam75]

I had a moment of clarity and thought a small discussion could be had. Though I may not be thinking clearly due to fatigue.

Can the win percentage be increased along with the average win amount vs average loss amount?

So where we had a positive expectancy with fewer wins than losses but with a higher average win amount, could the same average win amount stay the same or even be higher with a higher win percentage? Can it be done?

Feel free to elaborate away.

Ed Seykota once said that the reason majority of traders fail is because they try to change their probability of winning, rather than focussing on controlling their risk.

 

[It's Snake Pliskin]

Ed Seykota once said that the reason majority of traders fail is because they try to change their probability of winning, rather than focussing on controlling their risk.

But what do you say?

I agree with Ed.

I'll preface by saying that anything can be done and is possible, but the usual relationship with these two works inverse from my experience.

When they do work together its usually because of curve fitting or data mining.

Does that apply to real-time discretionary trading Nick?

And for mine, curve fitting can occur in the ultimate walk forward test, ie. hard-right-edge of the chart, unbeknowst to the fitter, until they don't, fit.

Sorry, I finally got around to reading Nassim Taleb's, Fooled by Randomness.

Finally? You've got to read his other book then.

I'm in the early stages of trying to analyse the one day performance of mining stocks that gap up - either driven by an announcement or not.

I'm looking for meaningful statistics in the relationship between a number of factors, including the % of the initial gap up, the intraday high, low and close prices, and the nature of the stocks trend prior to the gap up.

In other words I'm trying to find gap up stocks that have the highest probability of a positive outcome when buying into the gap.

For example on the 10th Sept, EMU gapped up 75% from a pullback while trending up, with no news, but then only made another 5% gains before it retraced and then closed below the gap up price.

Conversely on the 11th Sept, ADN gapped up 21% from a previous trending high, on an announcement, and then went on to make a further 27.5% gains before settling back to finish even on the day.

When I analyse 100 stocks, I'll see if I can devise some intraday trading rules for entry/stop loss/exit for these gap up situations.

Interesting Bowman, feel free to continue posting about it here if you like.

Snake

 

[bowman]

Interesting Bowman, feel free to continue posting about it here if you like.
Snake

Snake, I'm just starting to tabulate some data to see how the one day performance of gapping stocks compares and it may take me a week or more to do a sizeable number.

However, looking at the charts of gapping stocks I have noticed something that I'm sure gap traders are well aware of, which is that when gaps occur from a consolidation area, the following move is often a strong one.

Have a look at these breakaway and continuation gap examples.

 

[It's Snake Pliskin]

It is good to see someone thinking outside the box Bowman.

 

[bowman]

It is good to see someone thinking outside the box Bowman.

Unfortunately they don't let me out of the box very often, or for any length of time, but whenever they do I have a bit of a go.

 

[tech/a]

is that when gaps occur from a consolidation area, the following move is often a strong one.

You'll note that the gaps are all on volume.

The whole idea is to lock sellers out by gapping above the consolidation.
Sellers are unlikely to dump stock at a higher price.
The gap of course becomes support.
As does the volume print.
Gaps are normally half filled before continuing as some sellers sell into the initial enthusiasm.
As you'll also note the price then rises on less volume as sellers have withdrawn.

If you think about it its a chart of human psycology.
I find volume and price --charted---a fascinating topic.

 

[bowman]

You'll note that the gaps are all on volume.

The whole idea is to lock sellers out by gapping above the consolidation.
Sellers are unlikely to dump stock at a higher price.
The gap of course becomes support.
As does the volume print.
Gaps are normally half filled before continuing as some sellers sell into the initial enthusiasm.
As you'll also note the price then rises on less volume as sellers have withdrawn.

If you think about it its a chart of human psycology.
I find volume and price --charted---a fascinating topic.

Absolutely. High volume features in the vast majority of gaps that I have been looking at.

Here's a couple of real time tools in Phoenix charts that I use for locating gainers and volume.

1. Auto refreshes to show winners, volume, value.

2. More detail here so you can see for example the volume in the days top movers. These can be sorted from the highest to the lowest or vice versa and also show Market Movers by either %gain, volume or value.

Very handy tools to have in addition to scans.

 

[tech/a]

Bowman can you give me a link to Pheonix?

 

[bowman]

Cheers tech.
If you use multiple screens this program is pretty versatile. You can open up 4 instances of the program at the same time and configure different workspaces to suit any style of trading.

http://www.phoenixai.com.au/main/index8.php