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Ok so now we're getting the standard guru platitudes. People just don't understand and only the truly enlightened will join me! He's even making specific performance claims without posting broker statements. Not to mention suspicious accounts that have never posted before expressing interest. How long until he starts promoting his service and sending people PM's?
Don't let this smokescreen distract you from the fact that there are severe disadvantages to trading with a low reward factor. Such strategies tend to have hard drawdowns, and are not appropriate for most retail accounts. Despite all his talk about breaking from the standard, this is quite a common strategy that retail traders fall victim to.
All participants, please remember to not make personal swipes at each other.
If you can't get along, please keep it off the forum. There is no legitimate point you can make that requires or justifies talking down to another member, and doing so does not strengthen your argument.
Just cool it down, and leave off the personal comments.
Thanks.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
From what I seen from your post, I'll give you some of my insight. Starting from the beginning to the end. Trading futures especially NQ/RTY/ES/CL etc. Stop losses are strictly needed. A mental stop doesn't cut it, and especially since you have not tested this system on a LIVE account just a demo, they are two different ball games. Trading NQ without a stop loss especially with how volatile the markets are on a live account without much experience (sorry not trying to be mean just reality) is very dangerous. Now, we as retailers/majority of firms still cannot move Index prices in major ways. Looking at your 60-day backtest results, I would pick the stop loss one in a heart beat. Your Avg winning trade is $597 w/o Stop Loss, while your Avg losing trade is $2200 w/o Stop Loss. Your largest winning trade was $600 w/o Stop Loss and your largest losing trade was $6600 w/o Stop Loss. These are just some but very important red flags I noticed. Even tho you have more trades using a stop loss which makes it harder to compare to using no stop loss. Your avg winning trade was $595 with a stop loss. Your avg was $597 losing trade with a stop loss. Largest winning trade was $600 with a stop loss. Largest losing trade was $600 with a stop loss. Any average person looking at these two and comparing them can tell you trading with a stop loss is better. Using a stop loss gives you a base to your system, and then you work based around your stop loss. When I look at a trade placing my stop loss is the first thing I want to see, knowing where to place it defines the rest of the R/R makes me think is it worth it to take the trade or not. It will save you a TON of stress in the future to use stop losses. But if you can handle mental stops all the power to you.
I couldn't agree more. It took me years to accept that hard stops are necessary. Most of the time you can get away without stops, the problem is that one unlucky situation might blow up your account.
You can get away with it for so long before it catches up to you. This strategy imo would work better in the equities market with a ton of research and back testing. But I also do not know how he trades and how his trading style is to assume anything more.
This took me SOOO long to realize and was the reason its taken me so long to get profitable. (Not consistent yet) but better results than ever before.
Another detriment was trading micros. I was taking WAY TOO MUCH RISK because of the small size. If I leveraged those strategies into the minis I'd be utterly destroyed.
Now Im trying to keep losses small by playing defense but even more so taking small profits along the way. Its extremely hard and I still can't believe it's working because it doesn't make intuitive sense but it works.
And in fact its basically opposite of what Ive done for the last 6 years. Ive ALWAYS tried to go for a 2/1 plus ratio. Hasn't ever worked long term. I always end up with small winners and more AND larger losers. Not a great strategy. Whatever.
And it suits me as I %100 believe entries aren't really that important as you never really know where the markets going (plus it depends on stop loss/target/volatility/emotions/goals ect) taking small profits and painfully cutting those losses has worked AS a strategy.
Its hard to believe you can profit by taking so many losses but maybe thats why it works. (My initial stop is 2.5 times my target. BUT now I NEVER let that get hit.) Again opposite of what I was doing.
But a good mean reversion strategy that is found with out stops can be made more desirable with lower risk of high MAEs Especially when dealing in a market with higher IV. There are ways to do this. Not full fixes, but certainly tradeable fixes.
I have not finished reading all posts here but this stopped me in my tracks as you said a few things that resonated very strongly with me.
"Greed -> take position. Stop loss -> fear" WOW! So true!
I have said many times and repeat in different ways in almost every post. Entries are the least important part of a system (whatever the system).
The risk management part of the system is where the money is made. As you said a random entry system with GREAT management can be profitable in the long run. Try reversing that. Try to take great entries (whatever that means. An entry only makes sense in relation to the exit.) And throw risk out the window. We all know how that ends.
These are only my beliefs but I really would like your opinion as it is also what I believe.
I am no expert. I am not trading real money again till Im consistently profitable but my focus is %95 on the management AFTER entry! Not before.