NexusFi: Find Your Edge


Home Menu

 





Entry, Stoploss, Profit target


Discussion in Emini and Emicro Index

Updated
      Top Posters
    1. looks_one whatnext with 4 posts (0 thanks)
    2. looks_two Big Mike with 3 posts (5 thanks)
    3. looks_3 baruchs with 2 posts (2 thanks)
    4. looks_4 tpredictor with 2 posts (1 thanks)
      Best Posters
    1. looks_one kevinkdog with 4 thanks per post
    2. looks_two ucanttrade with 2 thanks per post
    3. looks_3 Big Mike with 1.7 thanks per post
    4. looks_4 baruchs with 1 thanks per post
    1. trending_up 5,163 views
    2. thumb_up 16 thanks given
    3. group 4 followers
    1. forum 15 posts
    2. attach_file 0 attachments




 
Search this Thread
  #1 (permalink)
 baruchs 
Israel
 
Experience: Intermediate
Platform: NinjaTrader
Broker: pfg
Trading: eminis
Posts: 323 since Jun 2009

Entry, Stoploss, Profit target - What is more important?
Until few days ago I thought that they have the same importance. I even argued that they are like a three leg stool.
There is no one leg that is more important then the other.
Now, after many discussions with myself, I think (know) that entry is the most important of them.
The explanation goes like this: You have a strict rules strategy (does not matter discretionary or automatic).
This strategy gives you X dollars on average per trade. Lets assume that this strategy has 50% win rate.
So if you improve you're stop by 1 tick or your profit target by 1 tick or your entry by 1 tick.
How will it affect the bottom line?

Started this thread Reply With Quote

Can you help answer these questions
from other members on NexusFi?
Has anyone taken trading from Agnieska Wood - Ahead Coach?
Psychology and Money Management
Quantum physics & Trading dynamics
The Elite Circle
MC Advanced Simulated Trading.
MultiCharts
How to create dashboard like this one?
Platforms and Indicators
Value Area Low (VAL) – Lowest Price Level of Profile V …
NinjaTrader
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
ApexTraderFunding.com experience and review
141 thanks
1 Minute Man
64 thanks
HumbleTraders next chapter
35 thanks
GFIs1 1 DAX trade per day journal
24 thanks
Vinny E-Mini & Algobox Review TRADE ROOM
23 thanks
  #3 (permalink)
ucanttrade
Milwaukee, Wisconsin, U.S.
 
Posts: 11 since Jun 2012
Thanks Given: 0
Thanks Received: 3


Rather than deciding which is most important, I'd like to consider this: which one must be fixed, and which one can be discretionary? I believe the Entry method you choose must be followed without deviation. However, the Profit Target may require some variation, in the event of unusual market reactions while you are in the trade.

Reply With Quote
  #4 (permalink)
 
whatnext's Avatar
 whatnext 
Rockland county , New York
 
Experience: Intermediate
Platform: NT 7
Trading: CL, 6E, SI, ZC
Posts: 230 since Mar 2011
Thanks Given: 338
Thanks Received: 81


baruchs View Post
So if you improve you're stop by 1 tick or your profit target by 1 tick or your entry by 1 tick. How will it affect the bottom line?

Rational being entry dictates the others and if its a good trade the one tick leway will be more profitable over all by "just holding on" to some of the winning trades?

"Be right and sit tight." - Jesse Livermore
Reply With Quote
  #5 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
Posts: 644 since Nov 2011

Entry is generally the most important because it defines your edge. If the market is more likely to move in your favor then not then you've an edge. Of course, everything else is important too. Stop loss is probably least important provided that its large enough.

Another way to view this is that you can't really test entries without exits and thus the entry and exit form a non divisible unit.

In reality, if you find an edge and don't close out the trade then your returns will start to match the market returns if long and inverse of market returns if short.

Reply With Quote
  #6 (permalink)
 
whatnext's Avatar
 whatnext 
Rockland county , New York
 
Experience: Intermediate
Platform: NT 7
Trading: CL, 6E, SI, ZC
Posts: 230 since Mar 2011
Thanks Given: 338
Thanks Received: 81


ucanttrade View Post
I believe the Entry method you choose must be followed without deviation.


tpredictor View Post
Another way to view this is that you can't really test entries without exits and thus the entry and exit form a non divisible unit.

I try and use the context of the pattern (and it's inherent S/R (if correct) to determine SL - in relation to tentative PT expectations - particularly when adding to the position / leveraging it interday.

"Be right and sit tight." - Jesse Livermore
Reply With Quote
  #7 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
Site Administrator
Developer
Swing Trader
 
Experience: Advanced
Platform: Custom solution
Broker: IBKR
Trading: Stocks & Futures
Frequency: Every few days
Duration: Weeks
Posts: 50,617 since Jun 2009
Thanks Given: 33,331
Thanks Received: 101,935


tpredictor View Post
Entry is generally the most important because it defines your edge. If the market is more likely to move in your favor then not then you've an edge. Of course, everything else is important too. Stop loss is probably least important provided that its large enough.

Another way to view this is that you can't really test entries without exits and thus the entry and exit form a non divisible unit.

In reality, if you find an edge and don't close out the trade then your returns will start to match the market returns if long and inverse of market returns if short.

I feel the exact opposite.

Entry is one of the least important. Stop loss is one of the most important, it is something you can plan and control and it defines your risk. I believe risk is one of the most important aspects of trading.

Almost everyone focuses on entry when the real focus should be on risk.

A good webinar on risk is here by Ernie Chan:
Webinar: [AUTOLINK]Ernest Chan[/AUTOLINK] - Capital Allocation and Risk Management

Mike



Join the free Markets Chat beta: Real-time Trading Insights

We're here to help: just ask the community or contact our Help Desk

Quick Links: Change your Username or Register as a Vendor
Searching for trading reviews? Review this list
Lifetime Elite Membership: Sign-up for only $149 USD
Exclusive money saving offers from our Site Sponsors: Browse Offers
Report problems with the site: Using the NexusFi changelog thread
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #8 (permalink)
 kevinkdog   is a Vendor
 
Posts: 3,673 since Jul 2012
Thanks Given: 1,893
Thanks Received: 7,377

I think most people favor entries because of the sense of control it conveys...

"I am not going to enter the market until I see this pattern/indicator/whatever. I decide when to enter. I am not ruled by the market. I am dictating the terms of my entry."

It sounds and feels very empowering, which is always very much in demand when someone is faced with uncertainty.


A few years ago, I had a couple of articles published on 2 experiments I ran:

1) random entry, with different exits
2) different entries, with random exits

My conclusions: "exit rules often overshadow entry rules" & "The point is to check if entry and exit signals are [both] really better than random. "


So, my leaning is biased towards exits being more important, but fully realizing I cannot ignore or diminish the importance of entries.


Interestingly enough, Ralph Vince, in his book "The Leverage Space Trading Model" makes a good argument for position sizing being the ONLY thing that really matters...

Follow me on Twitter Reply With Quote
  #9 (permalink)
 
Big Mike's Avatar
 Big Mike 
Manta, Ecuador
Site Administrator
Developer
Swing Trader
 
Experience: Advanced
Platform: Custom solution
Broker: IBKR
Trading: Stocks & Futures
Frequency: Every few days
Duration: Weeks
Posts: 50,617 since Jun 2009
Thanks Given: 33,331
Thanks Received: 101,935

Thanks Kevin. I don't have the link right now but search for anti martingale random entry and you'll find a thread. Would welcome your thoughts or participation in that thread.

Sent from my Nexus 4



Join the free Markets Chat beta: Real-time Trading Insights

We're here to help: just ask the community or contact our Help Desk

Quick Links: Change your Username or Register as a Vendor
Searching for trading reviews? Review this list
Lifetime Elite Membership: Sign-up for only $149 USD
Exclusive money saving offers from our Site Sponsors: Browse Offers
Report problems with the site: Using the NexusFi changelog thread
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #10 (permalink)
 tpredictor 
North Carolina
 
Experience: Beginner
Platform: NinjaTrader, Tradestation
Trading: es
Posts: 644 since Nov 2011


BigMike: From a system testing perspective, you're always going to start with some sort of entry. That's a strong reason to believe its the most effective. If your stop loss or exit is that powerful then it could also form another entry.

Dr Brett, a good friend of mine in past, wrote a lot about how exits were most important. Sure, your profit/loss will be defined by whether you exit at a profit. But, I could never find a strong argument that convinced me of that. I think his goal was just to get traders to think about exits.

I also ran a test where I looked at if one had perfect knowledge of entries and exits which were most important. The entries still turned out more important for the market I tested. The reason is that during market bottoms the volatility is higher which means the swings are much larger whereas market tops are defined by lower volatility. So, if you're trying to catch the bottom whenever it was, say in 2008, and you missed it by a day then you'd take a huge drawdown because the swings were so big. If you miss the top then its usually not as big a deal because the volatility is lower.

Reply With Quote




Last Updated on March 3, 2013


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts