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<br>
<b>answers in bold.</b>
<p>cb wrote:
<blockquote TYPE=CITE>Ira wrote:
<br>>
<br>> The stop in relation to the targets are 1/1 for 80%, 2/1 return for
70%
<br>> probability and a 3/1 return for a 60% probability.
<p>What is the key to increasing the %win?
<p> 1) Having target and stops of the correct size relative to
<br> a) each other or
<br> b) the markets volatility?
<br><b>Neither of these will increase your win percentage. Neither
of these are able to tell you that the trade is wrong. a) is a money
stop and has no relevance to the market or what it is doing. It just
relates to the amount of pain you can withstand before you pull the plug.
b) is ever changing has nothing to do with whether your trade is right.
It will only tell you how bad you will get hurt if you are wrong.</b></blockquote>
<blockquote TYPE=CITE>2) The incdicators/patterns/setup used to decide
that it is time to enter?</blockquote>
<blockquote TYPE=CITE><b>You use indicators, plural. Do you have
any idea of what these indicators are telling? Do you know if they
are set correctly for the stock or futures you are trading? Are they
duplicate and lagging indicators that tell you where you have been and
not where you are going? How many of these have to say buy before
you enter a trade? Patterns alone and crossover indicators have a
notoriously bad win percentage. The best I could ever do was get
them to give about a 38% win factor. Maybe someone else has had better
results. I see nothing here that says enter at this price, exit at
that price and if another price is hit you are wrong and get out.</b>
<br>I ask this question in the context of my trading where I have a very
low
<br>%win in my results.
<p>Conrad Bowers</blockquote>
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</x-html>From ???@??? Tue Jun 29 23:09:27 1999
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Date: Tue, 29 Jun 1999 21:34:16 -0700
To: realtraders@xxxxxxxxxxxx
From: Neal Hughes <neal@xxxxxxxxxxxxx>
Subject: Re: Ira's trading method
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Status:
At 08:43 PM 6/29/99 -0500, you wrote:
>Why would you ever cover either of the first objectives? The first one wins
>8 units and loses 2 in a set of 10 for +6. The second wins 14 units and
>loses 3 for a +11. The third objective makes 18 units and loses four for
>+14. Covering anything at the first objective cuts your profits by over
>50%. Your edge at the third objective is (3*.6)-(1*.4)=1.4 or 140% for
>every dollar risked. Congrats. With that type of edge and high winning
>percentage, you easily should be managing over $1 billion within the next
>five years. In fact I can't believe asset allocators are not beating down
>your door right now. At $1 billion getting paid 2% management and 20%
>incentive you should be clearing roughly $250 million per year in addition
>to your own trading profits of well over 100% per year. I wonder how you
>could create such a good system and still be throwing money away on your
>first two profit objectives.
>
>sb
>
Scot,
The math is fun, but I suspect it's not as simple as that. Perhaps
what Ira means is "of the trades which were held to the third objective,
60% were winners". This means that many of the trades were not held
that long, they were closed at the first or second profit objective,
or were close at a loss. In that case, it's not correct to assume
that holding all trades to the higher profit level is the best course.
Best wishes,
-Neal.
-----------------
Neal on the 'net.
Trade well. Train hard.
http://www.halcyon.com/neal/
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