How can we HAVE MORE WINNERS THAN LOOSERS IN TRADING?

[jahan]

Hi jahan

Thanks for explanation.

  In case of Religare and Sharekhan..., they did a severe mistake, when they don't know the system distribution(probability of losses),......
they need to increase the Capital Rather than just increasing position size/risk.

I could not follow your above point.
What I understood is
Both the PMS people followed position sizing very religiously but they had No RiskControl definitions/MECHANISMS in place-so they continued in increasing loss scenario just like any other stupid investor-hoping that market would eventually recover over time-but they never knew that mkt may need couple of years to complete that recovery.

To me only thing that is of superior importance is as market starts crashing,
Limit of risk and controlling risk in the limit defined well in advance is the only thing that matters,of course as loss begins a shrewd investor may cut position size to pull down the quantum of total loss amount.

I still wonder how in a crashing market by increasing capital can anybody benefit except at the fag end of crash or after reversal began making higher highs.
POSITION SIZE has to be increased in a profitable scenario and is to be reduced in a loosing scenario

regards
ford

Quote
[/B]

Hello,

First u need to know that.....there is no perfect method for Determining Coming Trend....

How do u know that Market will Start to crashing(it may be its a slight pull back)...so that u will reduce ur risk(anybody who says/talks like this he is not a Trader/ either he is Gambler/Academic Trader/insider Trader...)

let Assume that u know in Advance that Market is going to Crash....i don't no the reason ,why we have to reduce the risk,instead of going Short side of the Market(if up tick rule stops u for Short side in stocks, u can do it with same risk in futures).

Again.... how do u know that this is a profitable Scenario and this a loosing scenario...before entering so that we reduce the risk.i bet u don't know it, until u close the Trade.

See iam not here to Prove u wrong....iam just pointing out Real Trading Problems in real world.

in my opinion..Things we don't know/sure 100% about in Trading.
1)Coming Trend
2)The result of the Trade before entry(whether it will be profitable/loss).
3)how much time it will take before a breakout happens.

we need to Act on Present Situation,rather guessing coming events before they occur.

Regards,

 

[ford7k]

Hi Friend Jahan

iam just pointing out Real Trading Problems in real world.

in my opinion..Things we don't know/sure 100% about in Trading.
1)Coming Trend
2)The result of the Trade before entry(whether it will be profitable/loss).
3)how much time it will take before a breakout happens.

we need to Act on Present Situation,rather guessing coming events before they occur.

I agree with you about uncertainty in mkt and being able to detect the context-rising or falling mkt-is very difficult.

best regards
ford

 

[tssumit]

Hello,

My system is not Million dollar worth,if u want i will give u...it's simply based on moving Averages,Macd,and a Trend filter.....my stoploss is based on volatality.

Million Dollar worth is Controlling our own Mind/Pshycology.

For Building a trading system u have to know/do these things...

1)Decide what Markets ur comfortable with(stocks,futures,forex,options,commodities..etc)

2)Decide ur Trading style(i.e swing,short term,intraday swing,only intraday)

3)based on ur style of trading choose method of Trading i.e..Trend following or trend Fading or breakout.

4)Take 100 samples of ur Trading method....calculate..win%,Avgwin,Avglose,MAxdrawdown,no of continious loosing trades.

5)based on point 4 decide ur risk parameters...how much to risk.

6)choose one of Position sizing method depending on ur mentality...
a)percentage method.(using supp and resis)
b)percentile volatality method(using ATR periods)

or u can create ur own method...there r as many as, position sizing methods as there r traders.(but don't go for fixed lot or fixed qty).

if have these information and u have a positive expectancy system .then u can Trade with confidence...

Regards,

how can we go for position sizing if we dont have the system?
I mean u have to get the idea like market is not acting right so I should change my position size accordingly.

I am comfortable in trades which last for 2-3 days I was thinking to build my system around the post made by gurmy do you think it can be a good idea.
Or can you tell me any other way.

for your ref. http://www.traderji.com/swing-trading/76776-nifty-swing-trading-ideas-without-ta.html

Thanks

 

[jahan]

how can we go for position sizing if we dont have the system?
I mean u have to get the idea like market is not acting right so I should change my position size accordingly.

I am comfortable in trades which last for 2-3 days I was thinking to build my system around the post made by gurmy do you think it can be a good idea.
Or can you tell me any other way.

for your ref. http://www.traderji.com/swing-trading/76776-nifty-swing-trading-ideas-without-ta.html

Thanks

Hello,

The system u provided in the link has a good logic.....but there r some points to be considered which are must....

the problem with the system is.....it has fixed lots(2)..yes with this u can Trade every signal irrespective of ur risk bearing capacity....what if market gapup or gapdown against ur position....its ok when opened in ur favour.

here is the tricky part of the strategy...when ur taking loss.... ur taking on ur full position...but when market giving u profits(lats say above 60 points) ur with ur only lot taking advantage of profits...bcoz u already exited ur first lot at 20 points.instead of getting 1:3 u will only get 1:2 ....

see fixed things won't work when market in sideways...you may give away all ur profits.

suggestions...

1).Add a filter to it....like you may only enter long when weekly stochastic makes bullish reversal...vice versa for shorts ...then apply ur logic.

2).u asked about how to position size this type of system...
A)u can consider 4hr or Hourly support and resistance zones for ur stoploss points.
B).or u can use previous day low or high
c).or u can use intraday floor pivots.
d)u can use fibonacci levels..etc etc.

based on this u can determine ur stoploss point and position size ur trades.

see position sizing is directly proportional to system and system is with ur psychology.position sizing requires sufficient funds to be able to trade all calls,if u didn't have u may miss Some Trades.

Regards,

 

[tssumit]

Hello,

The system u provided in the link has a good logic.....but there r some points to be considered which are must....

the problem with the system is.....it has fixed lots(2)..yes with this u can Trade every signal irrespective of ur risk bearing capacity....what if market gapup or gapdown against ur position....its ok when opened in ur favour.

here is the tricky part of the strategy...when ur taking loss.... ur taking on ur full position...but when market giving u profits(lats say above 60 points) ur with ur only lot taking advantage of profits...bcoz u already exited ur first lot at 20 points.instead of getting 1:3 u will only get 1:2 ....

see fixed things won't work when market in sideways...you may give away all ur profits.

suggestions...

1).Add a filter to it....like you may only enter long when weekly stochastic makes bullish reversal...vice versa for shorts ...then apply ur logic.

2).u asked about how to position size this type of system...
A)u can consider 4hr or Hourly support and resistance zones for ur stoploss points.
B).or u can use previous day low or high
c).or u can use intraday floor pivots.
d)u can use fibonacci levels..etc etc.

based on this u can determine ur stoploss point and position size ur trades.

see position sizing is directly proportional to system and system is with ur psychology.position sizing requires sufficient funds to be able to trade all calls,if u didn't have u may miss Some Trades.

Regards,

Hi Jahan I am NOT thinking of taking the system on its face value but I am likely to modify few rules like I have thought to keep my SL at fix 10 Rs per lot but then I am concerned about the whipsaws.
I have seen one person trading on fixed SL as I mentioned and he is making handsome money.

But the problem is
1. he trades in 10 lots or so. (I am not financially and Mentally prepared to trade 10 lots)
2. He is in Markets from quite some time so has gained experience, as Jesse Livermore calls it a Hunch
3. I may not be at my screen for the whole day so I may not be able to access the 4 hourly charts, or intraday fib levels.
4. will try to look the gapups and gap down openings in historicals for solution.



Thanks

 

[jahan]

Hi Jahan I am NOT thinking of taking the system on its face value but I am likely to modify few rules like I have thought to keep my SL at fix 10 Rs per lot but then I am concerned about the whipsaws.
I have seen one person trading on fixed SL as I mentioned and he is making handsome money.

But the problem is
1. he trades in 10 lots or so. (I am not financially and Mentally prepared to trade 10 lots)
2. He is in Markets from quite some time so has gained experience, as Jesse Livermore calls it a Hunch
3. I may not be at my screen for the whole day so I may not be able to access the 4 hourly charts, or intraday fib levels.
4. will try to look the gapups and gap down openings in historicals for solution.



Thanks

Hello,

Before end of his life i think u know what happen to jesse livemore......

if u want further more clarity u can check SIBU sir thread, journey of a trader...

after his long years of trading Career he is still there only(may be in losses).

and he still wants to trade fixed lots ........i have one quote for this"doing the same thing and expecting different results".

see if u don't have sufficient Amount,which is a must for any trader then pls don't trade....there is a possibility of loosing entire capital.

and u need to define ur own Amount and Trade Accordingly.

Among 90% loosers in market there are 30% loosing because of Insufficient capital.

ur problems..
1) forget about how much he trades..know ur capacity.
2)we all are in markets.....blah...blah....so what.
3)u need not to be at ur screen all the day,its only required when ur entering the Trade.
4)as we can't stop gapup's and gapdown's....and there is nothing much u can do with fixed lots except reducing the lots.

 

[PartTime_Trader]

Hello

Nice discussions


What i think Jahan is trying to say is have a % amount in rs for risk (i.e. stop loss) and not fixed number of points, instead go with the technical stop loss i.e. a place or area on the chart which negates the premise on which the trade is based.

For e.g. if we are trading a break-out, we put the SL where the failure is confirmed. Now this maybe 20 - 40 or even 100 points.

We then size the position as per the risk, if SL is far away, we use smaller position.

All this (the sizing / MM) is influenced by the type of the system we want to use, so it first necessary to have a system/method in place before we finalize the MM rules,

Cheers
::thumb::

 

[ambarish123]

its not always about havin more winners,one could have 60-40 win ratio but if thos 60 wins gave 1k profit per trade and those 40 loosers was 2k loss per trade ,ur strategy of having more winners is no good in this situation...on the other hand if one winning trade covers the losses of 10 loosing trade then gettin even 10:90 win lose is more than enough

 

[ford7k]

[b]If you identify trend correctly and trade only during trending market,you winners will be more than loosers.
More winners are likely if you can enter trend early.
As long as you dont enter A buy at  Resistance area,your chances are better.
Often trader identifies trend and waits for better entry and in the process enters too late towards end of trend. Thus he puts odds against himself.
[B]USE combination stop & CONTROL RISK[/B]
USING A STOPLOSS THAT COMBINES BOTH PERCENTAGE OF TRADE CAPITAL AND TECHNICAL LEVEL HELPS.
2 PERCENT RISK OVER CAPITAL 50000 (Say 1000 rupees max) AND Risk Per Share (Say Rs 10) fixes number of shares to buy.
The risk per share is a function of entry level and initial stoploss level.Should the entry fall close to a HTF support level,then
RPS is quite low,thus pushes reward to infinite level when price never retreats from soild upmove.
suppose you buy L&T SHARES AT RS 1300,WITH RPS =10,THEN NUMBER OF SHARES =50000/1300=38, MAX RISK = 38*10=380
BUY LT SHARES AT 1300 WITH RPS OF 5,THE RISK TOTAL =38*5= 190
IF you use max risk/rps=1000/10=100 shares to buy
but you run out of capital.
[/b]

 

[jahan]

Hello

Nice discussions


What i think Jahan is trying to say is have a % amount in rs for risk (i.e. stop loss) and not fixed number of points, instead go with the technical stop loss i.e. a place or area on the chart which negates the premise on which the trade is based.

For e.g. if we are trading a break-out, we put the SL where the failure is confirmed. Now this maybe 20 - 40 or even 100 points.

We then size the position as per the risk, if SL is far away, we use smaller position.

All this (the sizing / MM) is influenced by the type of the system we want to use, so it first necessary to have a system/method in place before we finalize the MM rules,

Cheers
::thumb::

Hello,

ur exactly right..u got my point...

Regards,