The second sacred cow: "Grow profits, cut losses" - page 2
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No, I don't care too much if it's not my friends.
Well, here goes. Consider the simplest system at the intersections of two mash-ups. Where can this principle be applied there? Well if the system does not have a stop (closing at the opposite analytical signal, not at take or stop), then you certainly can try, but the system will be very complex. If the system has a fixed stop, then the principle "cut the losses" turns out by itself, but how to implement the advice "grow profits"?
:) Stop is to grow losses. :)
Well, if the system does not have a stop (closing not on a take or stop, but on the opposite analytical signal), then you can certainly try, but it would be a very complicated system.
it is nothing complicated, this is how it is done
it's just the crossing of the wagons (aka mcdee) is not good as a reversal signal
:) Stop is to grow losses. :)
>> I stand corrected. :) Speaking of stops, not "on the plus side" and at any significant distance from the opening into the negative.
Stops are needed!
Correction. :) When it comes to stops, not "on the plus side" and at some significant distance from the opening into the negative.
Stops are needed!
>> yeah, fishing's good.
OK, let's try to turn the subject around. Here's the question:
1. Why do beginners more often do the opposite - cut profits and grow fat losses? Maybe because it is psychologically easier for a beginner's delicate, unrefined soul?
Having made small profit a beginner hurries to fix it "in order not to be taken away".
And having got stuck on small stop-loss, he will try to withdraw his stops if the market goes against him.
I think it happens until one learns to distinguish trends.
Then there is a positive expectation and one is more confident of putting a small stop and a large profit.
Tautology (rhetoric)
Material from Wikipedia, the free encyclopedia.
Tautology (from the Greek ταυτολογία: ταυτο "same" and λόγος, speech) is a rhetorical figure, which is the repetition of the same or similar words. It often has the appearance of unnecessary repetition. Especially often the name "tautology" is used where there is repetition of the same root words. What makes tautology different from pleonasm is that it is not justified logically, but also emotionally. Pleonasm - "abundans super necessitatem oratio"(Quintilian) - only sins against brevity. From the point of view of necessity, of which Quintilian[source unspecified 48 days] speaks, it is really enough to say "they shall not return" without adding "they shall not return", as V. A. Zhukovsky[source unspecified 48 days] did, but this addition enhances the poetic side of speech, increases its expressiveness. On the contrary, tautology adds nothing, and repeats without any purpose. Tautology is superfluous pleonasm. The ancient Greeks called tautology perissologia(Greek περισσος - superfluous) and battologia (after the Cyrenian king Batta, a stutterer who repeated words, or the poet Batta, a lover of unnecessary lengths).
Tautology (logic)
[edit]Wikipedia-Free Encyclopedia
Tautology in
All our talk that a trader's behavior in the market is dictated by his experience or greed is nonsense! Our behaviour is dictated by the market itself and is aimed at maximising profits and of course there are variations due to the experience of the trader.
Most of us think the slogan "Limit losses and let profits grow" is something, either an incantation, or stupidity, or something else... Let's see where the hackneyed trader's phrases come from.
Suppose we have a "trend" market. Let's define by this term a quotire of an instrument the colour of the next candle is likely to repeat the colour of the previous one, see the picture on the left near the red line:
The blue line shows the balance curve for the TS that trades on the principle "Limit losses and let profits grow". On the right side of the picture you can see the size of bribes for such TS. It is clearly seen that the size of losses is limited indeed and does not exceed a certain value, which is determined by SL. The sizes of profitable trades are not limited from above and can be any.
Thus, we can confirm the effectiveness of the slogan on trend markets!
And what happens if the market is "falling" (flat)? We will call by this term a quotire of an instrument for which the colour of the next candle is likely to be different, compared to the previous one, see Fig. 2, the left red line:
The blue line shows the diposit balance curve for the TS that trades on the principle "Limit Profit and Let Losses Grow". On the right side of the picture you can see the size of bribes in such a TS. It is clearly seen that the sizes of profits are really limited and do not exceed a certain certain value determined by TP. Sizes of losing trades are not limited from above and may be any. Nevertheless the profitability of TP trading on such an "unusual" for a common trader system is positive (see the blue curve in the picture on the left).
Thus, it is necessary to recognize the expediency of trading by the principle "Limit profits and allow losses to grow" on flat quotes!
Now the main thing. If we collect statistics on the alternation of the colour of neighboring candles in all symbols and in all forex timeframes, we can see that the market is predominantly flat and the unusual rule "Limit profits and let losses grow" must be followed to build a profitable TS! Where then did the well-known and beloved "Limit losses and let profits grow" come from? Yes, simply that until recently, the markets were trending and only since the 90's have they taken their current shape. And the "wrong" slogan remained, misleading stupid and gullible working traders and leading to losing deposits!
P.S. The above two TS are not equivalent in terms of the risks a trader has to take when trading. All other conditions being equal, the risks for the flat instruments are much bigger than for the trend ones! This is due to unlimited losses, which are inevitable when trading according to the second rule. Therefore, to balance the risks, we must reduce the size of open positions, which will surely lead to a decrease in the profitability of the TS, compared to the TC of the first type. All this is an inevitable consequence of the efficiency of modern markets.
No, I don't care too much if it's not my friends.
Well, here goes. Consider the simplest system at the intersections of two mash-ups. Where can this principle be applied there? Well if the system does not have a stop (closing at the opposite analytical signal, not at take or stop), then you certainly can try, but the system will be very complex. If the system has a fixed stop, then the principle of "cut the losses" turns out by itself, but how to implement the advice "increase profits"?
Or maybe not to stop and not to grow at all. TS should give a signal to enter and a signal to exit. SL and TP have nothing to do with the TS at all - it's an insurance of the server access.
Now the main thing. If we collect statistics on the alternation of the colour of neighboring candles for all symbols in all forex timeframes, we can see that the market is predominantly flat, and to build a profitable TS we must follow the unusual rule "Limit profits and let losses grow"! Where then did the well-known and beloved "Limit losses and let profits grow" come from? Yes, simply that until recently, the markets were trending and only since the 90's have they taken their current shape. And the "wrong" slogan remained, misleading stupid and gullible working traders and leading to losing deposits!
this is bullshit and i declare it with all due respect
i assert with all my respect. for intraday the trendiness (or volatility as you may call it) is plentiful
for long term strategies I suspect there's plenty of trends too
You see, sab1uk, unlike you, I said "nonsense" and proved it very well!
As for your comment about "trending" on intraday, you are talking about stochastic trends, which are of no practical use, as there is no way to detect them. I, on the other hand, am talking about "real" - deterministic trends that can and should be detected!