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"You need to have a trading plan that allows you to
capitalize on that kind of volatility, and systems and indicators will not
do that for you. The best computer ever invented is the one between our own
ears, and you must be able to use that to trade successfully. I know most
folks believe that a 'system' will help their trading by removing the
emotions inherent in trading, but again the opposite is in fact true."
These are good points. What system testing i've done has shown that the
most profitable systems are the systems that let the market run. As soon as
I start exiting at a specific dollar amounts (ie scalping) invariably the
system profit decreases. My testing has shown that getting back into trades
after a premature exit can minimize the impact of premature exists but this
increases costs. However, the downside to letting a market run in ** most
** cases is giving back some of the profits -- probably more than you would
like. So my entry point becomes important because I need room to let the
market run and then exit. There are approaches that I have yet to test and
I keep exploring this area because it makes sense that capturing many small
moves is easier than capturing large moves. But we're trading off floor and
transaction costs and slippage added to small losses always seem to get in
the way of those types of systems.
I've watched traders who trade wihout strict systems per se and I've traded
that way too but what was true in those cases was that even the non systems
traders were trading with a methodology weather they realized it or not.
They were looking for points of support/resistance, looking for pullbacks to
MAs, something that gave them a consistent point of reference in the market.
They said they couldn't trade a strict system and that much may be true for
them but that's not to say that someone couldn't model their approach. In
fact, pert much dang near anything can be modeled on a PC. Without a
consistent approach trading is more gambling than anything and I've never
talked to someone who had success trading an inconsitent approach or anyone
succefull over the long term (making a living) that traded their gut.
> -----Original Message-----
> From: Bob Heisler [mailto:bheisler@xxxxxxxxxx]
> Sent: Wednesday, February 16, 2000 5:30 AM
> To: Don Roos
> Cc: Alan Courchene; List Omega
> Subject: Re: Which holds best promise?
>
>
> Hi Don,
>
> Actually I did not state that the entries determine the other
> factors and I
> don't believe that is the case. I will use the same entries
> every day, but
> how I manage those trades is dependent upon the other factors mentioned.
> There is no such thing as getting in "early", just like there is no such
> thing as slippage on a Market order. Nor does my fill have any bearing on
> how I will manage a trade. In fact, I would prefer to not even
> know my fill
> price as that can cause you to mis-manage a trade. I just want
> to know that
> I am in since the fill price has no bearing on my objectives for
> that trade,
> how the trade progresses, etc., etc.
>
> The only thing I am concerned about is getting in "RIGHT", I.e. with the
> current momentum or through the center of a range, and that does not mean
> early by any means. And this applies to any timeframe that I
> trade from - I
> use 5 minute charts and P&F charts to trade SP/ND/US/SF intraday,
> but I also
> keep an eye on the longer term charts since the big money is making
> decisions based upon those.
>
> Unfortunately, many traders are obsessed by this desire to find the
> "perfect" or "early" entries because they believe that this reduces the
> risk/stop for that trade. The opposite is in fact true.
> And I do not believe in scalping as that puts the math of trading
> decidedly
> against you. Each trade has to be managed based upon the
> conditions and on
> it's own merits...previous trades or whether you are up or down
> for that day
> are completely irrelevant.
>
> Yesterday was a perfect example of what I am talking about (and most days
> this year) - why take 2 points or so out of those huge moves we
> had on both
> the S&P and ND. You need to have a trading plan that allows you to
> capitalize on that kind of volatility, and systems and indicators will not
> do that for you. The best computer ever invented is the one
> between our own
> ears, and you must be able to use that to trade successfully. I know most
> folks believe that a 'system' will help their trading by removing the
> emotions inherent in trading, but again the opposite is in fact true.
>
> My apologies for getting a little off-topic.
>
> Bob
> www.rjhtrading.com
>
>
> -----Original Message-----
> From: Don Roos <roos@xxxxxxxxxxxxxxx>
> To: Bob Heisler <bheisler@xxxxxxxxxx>
> Cc: Alan Courchene <positionsize1@xxxxxxxxx>; List Omega
> <omega-list@xxxxxxxxxx>
> Date: Wednesday, February 16, 2000 12:25 AM
> Subject: Re: Which holds best promise?
>
>
> >Bob and Alan:
> >
> >Good info. Thanks. As you have stated, Bob, the entries are the
> determining
> >factor for the others in many ways.
> >
> >You guys know this, but it should also be noted that if your entry is not
> >optimal, your liklihood of being able to stay in the trade is smaller, as
> is
> >your ability to trade for a shorter period and still have a
> decent reward:
> >risk. That is, poor entries require larger entry risks to prevent being
> whiped
> >out of the trade, and poor entries require a longer holding period or
> better
> >trending pattern to make the trade worthwhile. Poor entries will both
> reduce
> >your percent profitable trades and your average trade. The
> stops required,
> are
> >therefore directly related to how optimally you can achieve entry without
> >lowering the percent of profitable trades. Also, many small accounts do
> not
> >have the luxury to decide whether to run 2 or 15 cars. So #1 (position)
> may not
> >be applicable, #2 (trade management) is dependent upon your entry. #3
> >(assessing of market environment) also is determined by wanting to get a
> good
> >entry as well as some prediliction for the continuance of the direction
> entered,
> >long enough to create a good reward to risk. (For example, one
> may decide
> not
> >to trade during the midsession so as to avoid the light volume and the
> scalping
> >games of the floor piranha).
> >
> >So, from my experience (scalping and short term daytrading), entries are
> #1.
> >Your time frame for a trade may be a determining factor for the
> ordering of
> your
> >priorities.
> >
> >Good idea for discussion, Valinda.
> >
> >Don
> >
> >
> >
> >Bob Heisler wrote:
> >
> >> I would prioritize them this way, and also add a couple of things.
> >>
> >> 1) Position size (no 1-lots)
> >> 2) Trade Management (stop placement, exit strategies, add-ons, etc.)
> >> 3) Sensitivity to the market environment (particularly for intraday
> trading)
> >> 4) Reading the price action (Entries, but also determines all of the
> above)
> >> 5) Trading without an OPINION or BIAS to market direction
> >>
> >> And I couldn't agree with Alan more that the entries are the least
> important
> >> as they are meaningless without the first 4 items.
> >>
> >> Bob Heisler
> >> www.rjhtrading.com
> >>
> >> -----Original Message-----
> >> From: Alan Courchene <positionsize1@xxxxxxxxx>
> >> To: List Omega <omega-list@xxxxxxxxxx>
> >> Date: Tuesday, February 15, 2000 4:20 PM
> >> Subject: Re: Which holds best promise?
> >>
> >> >I would prioritize them this way:
> >> >
> >> >1) Position adjustments (POSITION SIZE)
> >> >2) Stop management (RISK MGMT)
> >> >3) Pattern recognition (ENTRY)
> >> >
> >> >
> >> >IMHO,
> >> >One and two are key!
> >> >Three is far less important.
> >> >
> >> >Alan C.
> >> >
> >> >
> >> >
> >> >--- TradeWynne@xxxxxxx wrote:
> >> >> In a message dated 2/15/00 11:38:43 AM Pacific
> >> >> Standard Time,
> >> >> Valinda48524@xxxxxxx writes:
> >> >>
> >> >> > Which of the following trading approaches holds
> >> >> the most potential?
> >> >> >
> >> >> > 1) Position adjustments
> >> >> >
> >> >> > 2) Pattern recognition
> >> >> >
> >> >> > 3) Stop management
> >> >> >
> >> >>
> >> >> Valinda:
> >> >>
> >> >> Why are any of these mutually exclusive?
> >> >> I would do my best with all three.
> >> >>
> >> >> Bill Wynne
> >> >> SmartTrades.com
> >> >>
> >> >>
> >> >
> >
>
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