MY PICK IS ELN

[B.J]

What can I say, Webs... sometimes I just lose control... Got any pointy ears to sell me?

[spikefader]

lmbo. hilarious.

[Runner]

Not at all bro! And this brings up an excellent topic of discussion: win/loss ratios and trading equity curves. I'll post a few equity curve charts to show why I wasn't interested in taking just 2% today. (oh, and King, if all this stuff is messing up your thread tell me and I'll edit this post and move it to my thread).

So back to my ELN trade today. Why take only 2% profit when I'm risking a 1% stop out on the trade? If I did that, I'd need at least 4/10 winners just to be marginally profitable with a long-term equity curve. Check out this equity curve (note the 9 sample lines generated for a better picture of the average).

(chart generated over at http://hquotes.com/tradehard/simulator.html)

But if I aim for 20% gain with a 1% stop, and get just 1/10 winners (surely I can do THAT! ), my profitability (and more importantly my positive math expectancy over a long time frame) is over 4 times greater!



And it gets better! (see chart below) Let's just say I can hit 2/10 winners with that r/r ratio, my profit (and again, more importantly my system equity curve) is going to beapproaching 10 times greater than 'settling' for mediocre 2% intraday price fluctuations.


So to sum up, there's a couple reasons I'm only interested in swing trading stocks these days, and the long-term equity curve numbers is one of them. The other is I can system scalp emini futures much more profitably than stocks - and with a whole lot less financial risk. For example, one of my YM scalping systems (see below equity curve) has a win loss ratio of 1 and a 73% success rate, which gives me a math expectancy of 0.459, which is 2.3 times more efficient than if I aim to daytrade stocks (which you'll notice has a math exp. of a woeful 0.2). You'll also notice that the equity curve is a whole lot more straighter than the first one and the average of 9 curves is tighter!!



Anyone interested in doing your own equity curve calculation to work out if your own methodology/system/targeting/stop theory is actually worth doing head over to http://hquotes.com/tradehard/simulator.html

Remember: Trading success is a whole lot more than just straight winners or percentage winners. While straight winners can make you HUGE , ultimate profitability is is much more about risk reward and how you make it fit into your trading style. The numbers have to work otherwise you're wasting your time and your money.

Spike very awesome topic. This was my plan on ELN:

Entered late in day @ 6.88

Tgt was 7.00

Stop 6.85

Reward was .12/.03=4.0

I shoot for over 2.0 as minimum risk to reward ratio. I will not enter a trade with anything less then 2.0. This does not mean I hit it all the time.

I do think any trader would be exited about their portfolio with at least a 2.0 ratio.

This was my ETS or entry, target, stop for this trade, but being late in the day I choose to sell at break even. Anyway this is how I view it and I’m sure others can add some input about the impotance of R/R. This just makes good sense.

Interesting concept R/R is!!

[Runner]

Not at all bro! And this brings up an excellent topic of discussion: win/loss ratios and trading equity curves. I'll post a few equity curve charts to show why I wasn't interested in taking just 2% today. (oh, and King, if all this stuff is messing up your thread tell me and I'll edit this post and move it to my thread).

So back to my ELN trade today. Why take only 2% profit when I'm risking a 1% stop out on the trade? If I did that, I'd need at least 4/10 winners just to be marginally profitable with a long-term equity curve. Check out this equity curve (note the 9 sample lines generated for a better picture of the average).

(chart generated over at http://hquotes.com/tradehard/simulator.html)

But if I aim for 20% gain with a 1% stop, and get just 1/10 winners (surely I can do THAT! ), my profitability (and more importantly my positive math expectancy over a long time frame) is over 4 times greater!



And it gets better! (see chart below) Let's just say I can hit 2/10 winners with that r/r ratio, my profit (and again, more importantly my system equity curve) is going to beapproaching 10 times greater than 'settling' for mediocre 2% intraday price fluctuations.


So to sum up, there's a couple reasons I'm only interested in swing trading stocks these days, and the long-term equity curve numbers is one of them. The other is I can system scalp emini futures much more profitably than stocks - and with a whole lot less financial risk. For example, one of my YM scalping systems (see below equity curve) has a win loss ratio of 1 and a 73% success rate, which gives me a math expectancy of 0.459, which is 2.3 times more efficient than if I aim to daytrade stocks (which you'll notice has a math exp. of a woeful 0.2). You'll also notice that the equity curve is a whole lot more straighter than the first one and the average of 9 curves is tighter!!



Anyone interested in doing your own equity curve calculation to work out if your own methodology/system/targeting/stop theory is actually worth doing head over to http://hquotes.com/tradehard/simulator.html

Remember: Trading success is a whole lot more than just straight winners or percentage winners. While straight winners can make you HUGE , ultimate profitability is is much more about risk reward and how you make it fit into your trading style. The numbers have to work otherwise you're wasting your time and your money.

Spike very awesome topic. This was my plan on ELN:

Entered late in day @ 6.88

Tgt was 7.00

Stop 6.85

Reward was .12/.03=4.0

I shoot for over 2.0 as minimum risk to reward ratio. I will not enter a trade with anything less then 2.0. This does not mean I hit it all the time.

I do think any trader would be exited about their portfolio with at least a 2.0 ratio.

This was my ETS or entry, target, stop for this trade, but being late in the day I choose to sell at break even. Anyway this is how I view it and I’m sure others can add some input about the importance of R/R. This just makes good sense.

Interesting concept R/R is!!

[B.J]

Spike, I agree that this topic is awesome (despite chiding your colored lines )

My only problem is that I'm never sure what kind of gain I intend to target, especially in a choppy market such as this. I'm using 10% until I'm certain we're again in a bull.

If I end up chasing past a certain support area (rarely more than 4%), I adjust my amount invested proportionally so that I can allow a stock to move. If it does move back to where I consider support, I'll average to a full position. It's been working pretty well for me lately.

[Runner]

BJ, if you practice your r/r your most likely ahead of many traders/investors. In these choppy times money management is key. I will not play with a day trade stock and yes I honor my stops and yes many have took off with out me, but I followed my plan. I’ve herd Spike talk about following a plan. This plan needs to be figured out before the trigger is pulled. You would be amazed at how many jump in with out a plan. Then again a plan is only a plan if you follow it.

Sure my plans change and I’ll tighten my stop or close out before target, but ETS I think is key.

[kingofthehill]

rtq 7.21 ...........nice call Spike

[Runner]

Yea, great call on ELN Spike.

[spikefader]

Thnx guys.
Here's another thought:

[kingofthehill]

premarket $7.59

what price is Resistance Spike?

[spikefader]

premarket $7.59

what price is Resistance Spike?

$7.60 is R1 and $7.78 is R2. Those are intraday. $8.39 is daily price resistance, then $9.75. Then above that it's in the gap.

[Websman]

$7.60 is R1 and $7.78 is R2. Those are intraday. $8.39 is daily price resistance, then $9.75. Then above that it's in the gap.

I'm looking for an entry point...

[kingofthehill]

nice call again Spike close was $7.79 volume over 20 million

[Websman]

I'm looking for an entry point...

ELN is dropping after hours. Maybe this will give me an opportunity to get in tomorrow morning. Any thoughts?

[New-born baby]

Where did you get it?

Thnx guys.
Here's another thought:

Spike,

If I may ask, off what site did you pull this image? I might want to read more . . . .

And Thanks!