thread: Do you manage losers and let your winners run?

Think about this.

We take 100 trades. Every trade is a long with a 100 pip cease and 100 pip target.

50 transactions hit our target. 50 transactions hit our stops.

How many of the price paths that reach our stops were once profitable during it's way to the stop?

How many of the price paths that reach our targets were once losing on its way to the stop?

I believe it would be safe to assume 50%.

Thus 25 of our winner transactions were once losers and 25 of our losing transactions were at some stage winners.

Do you handle the winners and let the winners run?

Yes No... and Why?

The key to manage drawdowns as in to not be exposed to large drawdowns is to not open trades throughout unfavorable random market states.

....and there is the rub. The way to identify unfavourable market conditions (which you can clearly see as a consequence on your equity number ).

I'm hopeless at any kind of preventive method to avoid them apart from dynamically adjusting (with lag). . .however IMO this is where portfolio management using uncorrelated return stre has the capability to attain this together with all composite egies switched on 24/5.

Should you employ one trading egy that is either convergent or divergent in character then you need to be able to'filter' for market state....For example if you operate a live walk ahead demo in tandem with the your egy then it's possible to use the equity curve of your presentation to turn off and on your reside trader. As drawdowns are building'turn it off'....but once they begin turning....turn your own egy forth. It still is lagging in character and thus much at least for me personally is less suitable than a portfolio strategy using non-correlated divergent and convergent egies....however I haven't really fully examined this technique up to now.

quote....and there lies the rub. How to recognize unfavourable market conditions (which you can clearly see as a consequence on your equity number ). I'm hopeless at any form of preventive method to prevent them besides dynamically adjusting (with lag). . .however IMO that is where portfolio management utilizing uncorrelated return stre has the ability to attain this together with all composite egies switched on 24/5. If you apply a single trading egy that is either convergent or divergent in nature then you definitely need to be able to'filter' for market...

I have tried a lot of carp and at the end it only boils down to how long and effort one is willing to place into trade their egy. I know for sure trading isn't for me personally if I have to put in more than 2-3 hours every day. Section of my automation is everything around this facet as I turn 50 next month. Time and effort (and stress) has no relation to how much profit you'll be able to yield out of markets. My current discretionary style is amount of profit with least amount of time but comes with a lot of pressure and limited scalability. That is where my focus will be for another 10 decades. Its going tp be flow driven so I can no longer assume retrieval from drawdowns with expectations and all the hopes of long term growth of capital. Only a $1000/week cash flow is more than enough (for me personally ). I'm alao at a stage where I know where my personal weakness is different. What I have control over and that which I just can't. The compliance manager part of my EA was made to be my boss forcefully correcting any actions that I take which is not part of my trading plan. (Just sharing so others may know there are many many ways to develop and impose self descipline. Example: my EA and Any bad behaviour will close one commerce in reduction for a punishment. Another example: if I get greedy and stack too close to my open position, it will automatically close out the commerce in reduction or profit to prevent over exposure. Another instance: Stop Level is the form of scam by brokers designed to empty your account beyond retrieval. Margin call must occur whenever your margin level has fallen to 100 percent. You don't have any business keeping or trading open positions if your floating losses becomes larger than. Used margin. I do not have to be concerned about doing it my EA does this sh*t for me. . .same with drawdown percent from peak equity. Its a beauty to see it when it starts partial closing one microlot the second floating reduction reaches a predefined%. I'm sharing this because there are literally 100s of techniques to limit, control, reduce and eliminate risk outside of putting a hard stop loss on a per commerce degree.

quote I have tried a lot of carp and at the end it simply boils down to how much time and effort one is willing to put in to trade their egy. I know if I have to put in over 2-3 hours a day, for trading isn't for me personally. Part of my automation is all about this aspect as I turn 50 next month. Time and effort (and stress) has no relation to how much profit you can yield out of markets. My current discretionary style is fastest amount of profit at the amount of time but comes with a lot of stress and limited scalability....

We come to this stage of thinking only after we attain such amount of living.

Https://www.cliqforex.com/general-fo...803-trade.html
https://www.cliqforex.com/trading-sy...ng-system.html

Another approach is to exchange the more TFs, once a week/month/year trading.

The secret to handle drawdowns as in not to be exposed to big drawdowns would be not to open trades during unfavorable random market conditions. This means that each individual commerce needs to be rigorously risk assessed prior entry. The drawdown management procedure that follows to restrict damage is a bit late, when a drawdown has occurred.

Everything you mentioned can be replaced with only one word: discipline.

quote Seems as if you may be a quant trader, whereas there are institutional traders whose analysis includes other techniques, which could account for some of the differences between our conclusions.

Well, I can not call (confidently) myself a quant yet. However, this really is the natural evolution from the trading world. And like most people I would like to evolve 1 way or another!

Really , up until recently I had been big supporter of discretionary trading. (And I'm to some extend)
Due to my attempts, I still have not found a totally reliable means to eliminate the human judgment in the trading equation.
However, as time goes by I'm getting closer and closer to this objective.

Currently I'm quite deep into probability theory, time series analysis, and machine-learning. Attempting to expand my awareness by leaning new items daily...

My ultimate aim is to make a system which brings together the best of both worlds.
On one side we've got human judgment (thus far proven indispensable), and on the other hand we've got robots which never make mistakes and perform exactly as they're told. Now the billion dollar question is, how to combine these 2 items? The way to reduce decision into models with precise formulas? What are the inputs?

We should all keep in mind that, In the end of the day, trading is math and nothing more! The computers are incredibly good at math(calculations and speed) as soon as you provide them structured problem to address.
And we the people are quite good at pattern recognition. We have the capability to connect the dots at the sea of random variables, although we are not very fast. We also have the capacity (instinct ) to feel danger.

quote Well, I really can not call (confidently) myself a quant yet. But this really is the natural development in the trading world. And like most folks I would like to evolve 1 way or the other! Actually, up until recently I was supporter of trading. (And I'm to some stretch ) Because despite my efforts, I still have not found a totally reliable means to eliminate the human judgment from the trading equation. However, as time goes by I'm getting closer and closer to this goal. Currently I'm quite deep into probability theory, time series analysis,...

its an excellent post

really the robot sport isn't any different to the human game... 95 percent of robots lose to the 5% greater robots

one thing a robot cannot do is split away from their programming without human intervention

and humans made the robots. . Is not a funny thing?

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quote Well, I can't call (confidently) myself a quant yet. However, this is the natural evolution from the trading world. And like most folks I want to evolve 1 way or the other! Up until recently I had been big supporter of trading. (And I still am to some stretch ) Because despite my attempts, I have not found a totally reliable means to eliminate the human judgment from the trading equation. However, as time goes by I'm getting closer and closer to this objective. Currently I'm quite deep into probability theory, time series analysis,...

Nice post AO. There's a reason why I do not refer to my EA as a robot. My'automation' is the epicenter of what you described. The very best way to introduce human elements into a robot is to design your robotic features. Not just human activity but each aspect of the trading plan. As soon as your automation is organised this way, then the next and crucial thing becomes when to use such construction blocks (soldiers) to work in unisom in command from the mothership(egy).

Most robots fail because they expect the markets move fuction one way in a repeatable form. As soon as you work out how to make the robot more adaptive within the context, it becomes the very best of both automated and discretionary trading world.How I really do it is to parameterize everything making me in command of my automation via frequent compilation (repliing AI and machine learning abilities which is currently too sophisticated for my coding abilities but will get there some day)

Pattern matching is performed without intervention but movement behaviour management within the context of Newton's law of motion is quite difficult to automate via variable or fixed sets of rules. I knew that from day one into learning begin and how to code on my automation.

quote That is Not about the R:R. The 1:1 RR was used to generate the example simple. The question is do you allow the winners run and manage the winners. This applies to some R:R.

Well, in case your tp was nearing and you raised your tp, would not that mean that you're not after your initial setup?

quote Nice post AO. There's a reason I don't refer to my EA as a robot. My'automation' is the epicenter of what you described. The best way to present components into a robot is to design your own robotic features into building blocks that mimic human actions and decision making capabilities. Not human action but every component of the trading program. As soon as your automation is structured this way, then the second and crucial thing becomes when to employ these construction blocks (soldiers) to operate in unisom in control from the mothership(egy)....

Would it also be fair to state that most EA's fail because the developer / trader didn't account for variations of his/her system. Variations would also include effect news.