Wednesday, February 11, 2009

Nothing much to report...

Sideways day. Lots of consolidation that would explode out in a direction without warning or a spot to safely enter. I took a trade in the morning but caught the end of the trend and took a small 1 pt loss. Then I took another signal that would've been par (+.25) but again a violent whipsaw back at my stop slipped my exit not one, not two, but three ticks. So it took what would've been a -37.50 net into a -62.50 net outcome. Shit happens right?

So i've been doing a lot of observation and i've been becoming increasingly concerned with my stop to par +1 tick decision. About a handful of times in the past week i've been in positions that stopped me out for my tick of profit only to go up straight to my target. Or moves that backfill just enough to come through my entry price by a tick or two only to go up to my targets. So tonight i'm going to do some extensive backtesting on my live entries to see what relaxing my stops in general might alter my profitability. I'm thinking of rather than getting to par maybe getting to a reduced risk that would keep less than a point of risk, but still gave room for some backfill to occur. As it sits right now the winning trades I do get are a result of basically straight line moves without any backfill. The problem being, this is the S&P and backfill is the name of the game. So the hypothesis is that if I relax my stop management slightly and take on slightly more risk i'll get more marginal losses but get more winners that can more than make up for my losses and commissions. I'll report back with the results later.

Trade Results:

- 50.00


Michael said...

I used to have the same problem when I raised my stop to even when the trade went in my favor by the amount of my initial risk. Letting it go just a little further (75% of the way to my target) made all the difference.

Matt said...

I agree Michael and I think the results will prove that theory correct! I'm diving into it as we speak!

E-Mini Player said...

Good news; acct is funded and setup at Infinity :)

Log on to Yahoo tonight after you're done with back-testing.