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Simple Directional Trading profitable?
Started:December 10th, 2011 (12:09 PM) by Big Mike Views / Replies:3,109 / 29
Last Reply:November 24th, 2013 (10:38 AM) Attachments:0

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Simple Directional Trading profitable?

Old December 11th, 2011, 11:17 AM   #11 (permalink)
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websouth View Post
[COLOR="Blue"]

Now here's a side thought -
600 fund managers flip a coin. Heads they make profit for the year. Tails they lose it all and fold up shop. Let's not over analyze this and assume even distribution.

...

Now the 4 money mangers left strut out and say "look I have made money 8 years in a row while others have failed. I know the markets - I am a market guru." Millions then flows into their funds. (from all the people who had money in the funds that blew up previously, right? They want to be with a winner)

all on a coin flip. no skill. So luck vs skill I dunno

I would describe this as a logical fallacy. Imagine another scenario with similar observational parameters:

150 basketball players flip a coin. Heads they are in the upper half of scoring on in the NBA, tails they are in the lower half.
2nd year - 75 left
3rd year - 37 left
4th year - 18 left
5th year - 9 left
6th year - 4 left

Now Kobe Bryant, LeBron James, Carmelo Anthony, and Pau Gasol strut out and declare themselves some of the best players in the NBA. Is this skill or just luck?

The logical error is combining an observation (few NBA players are at the top of the game) with an arbitrary cause (their success is just luck) and creating a conclusion: Being good at basketball is simply luck. Just because luck is a possible explanation, does not make it the truth.

I think anybody who approaches trading seriously and has studied it for several years would describe it as a skill-based activity More of an art than a science.

Seek freedom and become captive of your desires. Seek discipline and find your liberty. - Frank Herbert
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Old December 11th, 2011, 01:49 PM   #12 (permalink)
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Surly View Post
Just because luck is a possible explanation, does not make it the truth.

I think anybody who approaches trading seriously and has studied it for several years would describe it as a skill-based activity More of an art than a science.

Would bet on that trade for sure. Agree 100%.

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Old December 11th, 2011, 10:29 PM   #13 (permalink)
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Surly View Post

I think anybody who approaches trading seriously and has studied it for several years would describe it as a skill-based activity More of an art than a science.

Trading is the art of a observation of an action; A trader anticipates the a reaction of the observed action and makes a decision to place a trade or not.

This could never be a science because each action observed depends on your own point of view. This is what makes trading difficult. Show 100 traders the same chart and 90% of them will disagree on what they see and what the outcome will be.

SD

nosce te ipsum
Life's real failure is when you do not realize how close you were to success when you gave up.
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Old December 11th, 2011, 10:57 PM   #14 (permalink)
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I don't know about long term but so far simple directional trading has worked pretty well for me.

I have yet to place an option and have only hedged a couple of trades.

I plan to do more in the future. Always learning...

Strategy ≥ Money
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Old December 14th, 2011, 01:45 PM   #15 (permalink)
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Please, continue...

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Old December 17th, 2011, 10:51 AM   #16 (permalink)
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To me trading is the art of identifying those moments where the market has an edge, that is the odds of it moving in one direction rather than the others (don't forget to include sideways) is better than even and evaluating the potential reward to the risk necessary to take the trade. The classic example is what appears to be the end of a pullback in a trend.

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Old December 17th, 2011, 11:32 AM   #17 (permalink)
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Direction

@Gary D @Surly @Siler Dragon I agree with everyone, I m sorta new to this animal. But direction has the most rewards. How to execute direction is where the skill comes in. But up is up and down is down, sideways is the by product> This being said who is more profitable trend trading? day trader trading off of day charts or traders using 1min,2range,1500tick,4000volume or whatever they use? Noise,bots,hftm makes it harder in the short scope. Long scope would your wins far exceed ur losers? using the same trading technique for either trade with direction .
Has anyone just entered off a day candle and walked away with your stops in place then come back and look at it,human motion was eliminated. You can make more on paper being in and out but your success rate drops. Ie. hindsight ES fell 15 points down on a downtrending day, we'll say 5 steps down. so if you tried to enter on each step ur 1 pt late on entry and you loss a point on rev exit total net was 5 pts if you were day trading long you got all 15pts...

Thoughts?

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Old January 29th, 2012, 03:54 PM   #18 (permalink)
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Here's my simple directional trading stats 12/18/11 - 01/27/12
25 wins
16 losses
234 tick profit
122 tick loss
Profit Factor 1.99
Total Profit 112 ticks
Winning Percentage 61%
Avg. Win 9.36
Avg Loss 7.63
Expectancy 2.72

I traded quite poorly last week which lowered my stats in all areas. I did manage
to pull +10 ticks on the week though. A poor week but still positive
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Old January 29th, 2012, 03:59 PM   #19 (permalink)
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Massive l View Post
Here's my simple directional trading stats 12/18/11 - 01/27/12
25 wins
16 losses
234 tick profit
122 tick loss
Profit Factor 1.99
Total Profit 112 ticks
Winning Percentage 61%
Avg. Win 9.36
Avg Loss 7.63
Expectancy 2.72

I traded quite poorly last week which lowered my stats in all areas. I did manage
to pull +10 ticks on the week though. A poor week but still positive
Please register to view the post attachment(s), image(s), or screenshot(s) - it's simple and free.

@Massive l, can you comment on how many times per day you change direction?

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
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Old January 29th, 2012, 04:12 PM   #20 (permalink)
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I won't change direction at all if price is above
a certain price. Basically, if it's outside what I consider
developing price and into a buyer controlled zone (or seller controlled for shorts).
If price is inside development (usually on a 2hr chart), I may change direction 1-3 times/ day.

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