The Black Swan Experiment

[JotaJotaGM]

I have recently taken it upon myself to experience an experiment of sorts. I began a couple weeks back with an insignificant amount I don't mind losing ($200) and have been scalping with an ultra-high risk/ultra-high leverage approach. I am trading using 500:1 leverage - any less and this won't be possible - where every 1 pip move represents 2 percent of my account balance. I have been targeting involving 2-3 pips, which after commissions (I exchange on ECN) nets about 3.5% per trade. Somewhere between 18-20 trades doubles your account. One losing exchange of 40-50 pips (based on margin requirements) will wipe out the account.

I will state the obvious currently... Trading this approach indefinitely WILL at some point create a reduction of the entire balance (hence the thread title).

I know that is not anything new, and I am sure traders have completed this here with varying degrees of success. I started this thread since I am at the very first landmark of 20 winning trades, and having doubled the account I am somewhat at odds of the way to move. Here are the 3 options:

1) Withdraw my first starting amount of $200. The positive here is your reassurance that you are henceforth trading with home money, as you'll break even in the worst. The drawback is that you will be starting the cycle completely over.

Two ) Withdraw a predetermined percent, somewhere in the range of 20-50%, and then go for a different cycle. Example: $200 $400 subsequently draw $80, $320 $640 subsequently draw $128, $512 $1,024 subsequently draw $205, $819 $1,638 then draw $328, $1,311 $2,621 then draw $524 (at this point which will be 100 trades in a row which is extremely improbable )

3) Continue going as I have and try for a different cycle ($400 $800)

My trade explorer under has been filtered to demone the way the experimentation has gone so far. I have included a survey in this thread... how would you move?

[JotaJotaGM]

quote I am only telling the truth of the problem. The experimentation will always fail.

You're not saying anything that I don't know. I fully acknowledged this in the opening post.

Thank you for your input.

Moving on...

[niko]

Your aproach its wrong and right at precisely the exact same time man: you need consistency in your entrys and 1:1 with a high hit rate in order to pull this off, thats all

and trustworthy entry that gives you and unbalance in your favor (regardless of the sum in pips doesnt matter, what things its to go positive at least 1:1, if more great but dont expect it)

With price based chart (maybe not the stupid/unreliable time established candlestick) I exchange 1 pattern in 1 certain condition and nothing else; it provides me with enough confidence to put 20/30% per commerce and possess a high hit rate with a 1:1 ratio, I lose (mainly break even or win) if I need more like 1:2 my hit rate gets reduced, etc . Not worthwhile

Rethink your aproach and try again guy, the people who say its impossible is stuck and they put in training the identical method of thinking, attempting the identical notion, using the same tools, charts/crap, etc etc, of course they cant have positive results!!

[Rororo93]

quote As I mentioned earlier - that is not regarded as a primary method of trading. That is an approach. What you are describing is a conventional approach - cut losers short, let winners run, 2:1 r/r, etc.. . Which I also trade. But that is not the purpose of this particular account/thread. The concept is to only trade off slam dunk entries for two pips and avoid the moves against you completely. I understand that it is a bit of a pipe dream to do that all the time. But that's the whole purpose of the thread...

If you say so... but it is, conventionally, what each new trader tries . It's'unconventional' since it does not function and anyone that tries it loses their account. Crucial Point has his system calibrated nearly perfectly to capture any slam dunks that may appear with this method and his system only works because he dismisses the losers immediately. I've put a couple thousand hours to scalping 1m and tick-charts. Slam dunks exist in retrospect. A flash crash will wipe out any scalper who starts off his trades full-tilt.

I'm only telling the truth of the matter. The experiment will always fail.

[JotaJotaGM]

quote The problem is not that you are missing slam dunks. It's that you are producing nothing off the slam dunks and letting little moves against you blow you out of the water. You have to keep solvent long enough to find the true slam dunks and let them achieve their potential. It's the only method. The best traders are just right about 55 percent of the time.

As I mentioned before - this isn't regarded as a primary system of trading. That is an experimental, unconventional approach. What you are describing is a traditional approach - cut losers short, let winners run, 2:1 r/r, etc.. . Which I trade. But that is not the point of this specific account/thread.

The concept is to just trade off slam dunk entries for 2 pips and steer clear of the motions against you completely. I know it is somewhat of a pipe dream to perform that all the time. But that's the Entire point of this thread

[Rororo93]

quote Well, yeah, obviously. That is the reason why this thread was called an experiment and it was done with an insignificant sum of money. It is not supposed to be a primary system of trading. And I agree, it is quite rare to get this amount of assurance in a transaction. But I can think back to this initial run and that I can recall several entries out of the 23 winners in a row that just felt like total slam dunks. There were not a lot of them, but the couple there were actually stick out in my head upon reflection. That is what you must get focused on. I believe you have...

The challenge isn't that you're missing slam dunks. It is that you're making nothing off the slam dunks and allowing small moves from you blow you out of the water. You have to remain solvent long enough to find the true slam dunks and let them achieve their potential. It is the only method.

The best traders are only about 55 percent of their time.

[JotaJotaGM]

quote Everything you are starting to learn from this is accurate. Which is the reason why traders try not to go for broke; it is very rare you could be supremely confident.

Well, yeah, obviously.

That's the reason why this thread was titled as an experiment and it had been performed with an insignificant amount of money. It is not supposed to be a main system of trading.

And I agree, it's extremely uncommon to get that level of confidence in a transaction. But I can think back to that first run and I can recall several entries out of the 23 winners in a row that just felt like total slam dunks. There were not many , but the couple there were actually stick out in my head upon reflection. That's what you must get focused on. I think you have to eliminate every other entrance and concentrate on just those. Easier said than done, obviously.

[Rororo93]

quote I've certainly had some drawbacks... Of the 3 major losses, one was pure dumb luck given my fleeting market vulnerability (unforeseen news event), one, however, was a reduction on a legit signal, and one was a bad entry that was simply a lack of discipline. Under ideal circumstances, this would translate to one major loss rather than three. But that is not reality. What I am beginning to learn from this is that when you employ a move for broke scalping egy, you really have to be supremely confident that you're choosing the best entry possible....

What you are beginning to learn from that is correct. That is why traders try to not go for broke; it's very rare that you can be confident.

[JotaJotaGM]

Not much of an experiment. Most of us know that the end result. $200 certainly would've been a good meal. It's a shame.

I have certainly had some drawbacks... Of the 3 major losses, one was pure dumb luck given my fleeting market exposure (unforeseen news event), yet, nevertheless, was a reduction on a fictitious sign, and one was a bad entry that was simply a lack of discipline.

Under perfect circumstances, this could translate to one major loss rather than three. But that isn't reality.

What I am beginning to understand from this is that if you employ a move for broke scalping approach, you truly must be supremely confident that you're picking the very best entry possible. And this actually gets harder with success. When you have awakened a lot of small winners, you start to think I am only going for 2 pips. This entry does not look perfect, but it ought to be good enough to pick up 2 pips.

Apart from not having a egy at all, the inability to adhere to a egy is most likely the most difficult weakness to overcome.

But I did this and I do not think it had been a fluke. There's no reason that I can not do it , so long as I adhere to my own approach and do not settle for entries that look good enough.

[Rororo93]

Not much of the experimentation. Most of us know that the end result.

$200 certainly would've been a decent meal. It's a shame.