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In an objective approach, no matter how much a setup is yelling, it does not hold any more weight then any other occurrence of that setup. If my historically determined expectant win rate for that setup is 70%, that setup is considered to have a 70% chance to win, not 75, not 90, no matter how much it yells, no matter how gorgeous it is. It will be traded exactly like any other occurrence, same risk, same contract sizing, same trade management.
I could not really critique the setup itself since I don't trade it, never researched it, never backtested it, so, I don't know it intimately enough to critique. Now, if you were trading basic divergence, then I might have had a thought or two
You might want to focus on other instruments than the ES. Although my views are diametrically opposite of most on this board, I find CL to be a much easier instrument to trade.
One last piece of advice: If I were you, I'd probably watch the markets for some time instead. Take (mental) notes of how the instrument behaves, gather statistics on the average fluctuations etc. Then try to develop a trading plan from the information you have gathered...
Have you considered taking a step back and try to swing trade instead?
This H.D. setup is a Classic Felton move, of course without his Proprietary custom designed indicators and has a 79% win rate. My Risk to reward was 1/4, because my risk was 2ticks(based on A.T.R calc.) PLUS SLIPPAGE and my TP was the far side of the kelter channel, since trend was up.
If I had given it a extra tick to breath, it would have been a winner.
I don't know how a 2 tick stop generally behaves on the ES, but I know I can't get away with that on the instrument I am familiar with like CL, GC. When you say the hidden divergence you trade has a 79% win rate, how did you arrive at that number? Did you measure that win rate on the ES itself? with a 2 tick stop and keltner target? or another instrument altogether? Did you yourself backtest the setup and derived the win rate? I hope you are not taking Felton's word for it
You have much fear in your trading, which if you have read any of my posts, then you should identify this as a personality weakness, and you should now start learning to cope with this or trade around it.
If someone has developed a system with methods that multiply their strengths and understand their weaknesses, and you have done your due diligence then why is a stop loss so close to your entry needed. I do not use any more than a critical stop loss. I use conditions to exit my trade whether it be a profitable or loosing trade, no stop loss is needed if you have confidence in your system.
I am not in the business of doing peoples work for them, but you seem to be struggling with the advice you are given about learning about yourself and putting in the hard work of developing a system that works for yourself so I will give you my method of exiting a trade.
I use a close below/above (depends on if I am short or long the market I am trading) a price level with increased volume to take me out of a trade. So I can't be whipsawed out of a trade by a few ticks or even a few bars and then the trade go in my favor.
The 2 tick stop was derived by way of calculation of an A.T.R X 1.5 StOPLOSS I LISTENED to BIG MIKE'S advice a few posts back and scraped my arbitrary stoploss for one determined by the MARKET ITSELF!
And yes, I took feltons word on this one, But on my 3 pin setup I PERSONALLY did manual backtesting to determine the win-rate.
Hey, the guy was head trader for T.I. for a long time and he has been around even longer.
MONPERE, you can not check-out every single thing on your own, he have to "accept somethings, sometimes on faith!.
The thing about statistical analysis in trading is it has to be pretty specific. Felton may have determined the 79% win rate on a daily chart of the Japanese Yen with a 250 tick stop, and a 5 tick target. That 79% win rate no longer holds water when applied to a 6 tick range of the ES with a 2 tick stop, because then it becomes comparing apples to chickens, that's why I asked the questions. Any stat you use has to come from your own backtesting of the exact method (instrument/entry/stop/exit/trade managemnet) you are trading.
BTW, not trying to ruffle any feathers with my posts.
Monpere,
My friend, I truly appreciate and WELCOME your input, As well as everyone elses, maybe in the process we can all pickup something from this dialog!!
As Spock said in one of the StarTrek episodes "The needs of the many, outweight the needs of the one"
Please bring it on!if it can help improve my(our) skills.
Sorry, but you may have heard me but I don't think you really were listening... at this point Bobby, I really feel you are simply one of the individuals who is not cut out for trading. Do not get upset about it, after all, it is just my opinion and even more than that, trading simply is not for everyone. There are a lot of professions that are not for "everyone", it takes the right kind of person sometimes to really excel in a profession.