All good it does fluctuate but I check the 45 min chart ATR to make sure that it can hit my 12 point target in that time.

I am curious to what you think about following rules. How long would you say that someone should follow rules made before altering them.

xplorer 

My bad, marchedcircle. My instinct was to reply to your target of 12 points with my scalper's hat on, and that was a mistake. When I say "scalper" (because different people may attribute to this definition different meanings), I mean that most people who use the term "scalp" tend to take small positions out of the market at a time, say 2-3 pts max at a time. Hence the "scalp" out of the market. Of course, what works for one person who scalps does not necessarily work for another who does not. Hence why I added a clarifying edit, to stress that, as long as you've done your research and you've tested your idea with an acceptable win rate and risk reward, then it all boils down to executing what you've researched. I hope it makes sense, please revert if not.

marchedcircle 

I am curious to what you think about following rules. How long would you say that someone should follow rules made before altering them.

Well, rules in trading is a wide-ranging topic for me.

I say this because, with "self-directed" trading, there is virtually no boundaries to what one can do. The only boundaries are the ones set by your account size and your broker's risk limits.

All this freedom tends to be more of a curse than a blessing in financial markets.


As one gets more and more experience, establishing ground rules as good practice becomes common sense.

A few examples of rules to think about (these would apply to discretionary, directional trading):

• how often one should move a stop
• whether one should have stops at all
• how many trades to take (per day/per week/etc.)
• how many consecutive losses before stopping (for the day/week/etc.)
• whether to set profit targets (for the day/week/etc.), and what targets to set

As to your specific question ("How long would you say that someone should follow rules made before altering them"), because the way you formulated it, I would say you should follow your rules as long as they are serving you well.

It is important though to look at the rules you have as a whole, over a reasonable number of trades.

By that I mean: there should be a trade sample size which is large enough for you to determine whether the approach you have studied is meeting your goals. If it is, great. If it is not, it's a matter of understanding why.


I hope it makes sense and it answers your question.

Yes, that confirms what I believed about my rules. I actually just changed my rules 2 days ago. I will let you know how it goes. I had 86 trades of solid data from my trading journal. It turns out my worst set up( being a B- set up) was the only set up that was positive in PnL with the highest win rate.

xplorer 

Well, rules in trading is a wide-ranging topic for me. I say this because, with "self-directed" trading, there is virtually no boundaries to what one can do. The only boundaries are the ones set by your account size and your broker's risk limits. All this freedom tends to be more of a curse than a blessing in financial markets. As one gets more and more experience, establishing ground rules as good practice becomes common sense. A few examples of rules to think about (these would apply to discretionary, directional trading): how often one should move a stop whether one should have stops at all how many trades to take (per day/per week/etc.) how many consecutive losses before stopping (for the day/week/etc.) whether to set profit targets (for the day/week/etc.), and what targets to set As to your specific question ("How long would you say that someone should follow rules made before altering them"), because the way you formulated it, I would say you should follow your rules as long as they are serving you well. It is important though to look at the rules you have as a whole, over a reasonable number of trades. By that I mean: there should be a trade sample size which is large enough for you to determine whether the approach you have studied is meeting your goals. If it is, great. If it is not, it's a matter of understanding why. I hope it makes sense and it answers your question.

marchedcircle 

I had 86 trades of solid data from my trading journal. It turns out my worst set up( being a B- set up) was the only set up that was positive in PnL with the highest win rate.

OK, this is useful data.

What you're saying is that you have a number of setups. Presumably the setups you have analyzed and traded make up a total of 86 trades (if I understand correctly).

You're also saying that your worst set up is the only one with a positive expectancy. This should give you pause and perhaps give you a chance to drill-down into your data, asking questions such as:

• How many trades per setup have I taken?
• Is my approach suggestiing an overall positive expectancy?
• If not, should I revisit the question of whether I have an edge?
• Have I taken enough trades so that the sample size is robust?

These are just some of the questions I would ask myself at this stage. As for the sample size, here is a question I asked Morad Askar (a.k.a. @FuturesTrader71 here on the site), about sample size and deviation, but for the purpose of this discussion, he recommends a sample size of 200 trades or more.

I believe there's a lot of value in analyzing data from sample trades to drive traders towards their objectives.

There's a lot to say about win rates, but I'd recommend to check an article by Kevin Davey. I'll see if I can find it.

xplorer 

OK, this is useful data. What you're saying is that you have a number of setups. Presumably the setups you have analyzed and traded make up a total of 86 trades (if I understand correctly). You're also saying that your worst set up is the only one with a positive expectancy. This should give you pause and perhaps give you a chance to drill-down into your data, asking questions such as: How many trades per setup have I taken? Is my approach suggestiing an overall positive expectancy? If not, should I revisit the question of whether I have an edge? Have I taken enough trades so that the sample size is robust? These are just some of the questions I would ask myself at this stage. As for the sample size, here is a question I asked Morad Askar (a.k.a. @FuturesTrader71 here on the site), about sample size and deviation, but for the purpose of this discussion, he recommends a sample size of 200 trades or more. I believe there's a lot of value in analyzing data from sample trades to drive traders towards their objectives. There's a lot to say about win rates, but I'd recommend to check an article by Kevin Davey. I'll see if I can find it.

Awesome thanks for the reference, I read it. I have a sample size of 87 from 5 months of consistent trading. I forget if I mentioned that I'm using tradersync.com to plug my data.

I asked Chat Gpt if my sample size was large enough and it is the smallest sample size you can actually start to trust. Knowing that 200 is more accurate l am going to aim for that. I have changed my rules and I'm going to wait till I hit that 200 mark to change them again. Seems like it will take a year to see what the data says.

xplorer 

There's a lot to say about win rates, but I'd recommend to check an article by Kevin Davey. I'll see if I can find it.

@marchedcircle above I mentioned an article I would try to find.


Here it is:

https://kjtradingsystems.com/algo-analysis-paralysis.html

The author is Kevin Davey ( @kevinkdog here on the site), who is a highly respected algorithmic trader.


This is an excellent article which, at the time, was a real eye-opener for me. I was drawn to high win rate probabilities but, little did I know, they were only part of the equation, as Kevin puts it.


@SoberTrader you may also want to check this article out. It may be helpful to you too hopefully.


Note: While the article was written with algorithmic trading in mind, the fundamental concept applies to discretionary trading as well.