tommyw-5088

richard dennis , had a few of his traders make random entries into trades , then use good money mgt.

i have wondered if a ramdom entry would work with good money mgt. rules .

most of the sucessful traders i have studied , have a few very simple rules , trade in the direction of the trend , use good stops .

dennis , with his turtles wanted them "in the market " so they could catch the trend .

has anyone ever ran a random entry system , with paper money .?

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Simit Patel

i've thought about it. sometimes, because my style is fundamental and geared towards a timeframe that is a bit longer (i.e. weekly or monthly chart), i don't care too much for being totally precise on the entry point. stop loss management is what counts anyway, in my opinion.

while i have had some success with that approach, i think it is still much better to use technical analysis to identify your trade opportunities -- especially for those who want to trade for a living and/or trade on an active, short-term basis. just my opinion of course.

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cody.byars

simit thank you for almost always giving us video's to study.

Ektrader

Hi tommy,

Every entry is a random entry, and money management is always the key. It's important to go into every trade with the understanding that you could be wrong. With that being said, You want to give yourself the best possible shot at being correct. (Going in the direction of strength, taking trades at S/R etc...) That's why we study the way we do. Also, from a psychological standpoint. I like to go into my trades "feeling good" about the trade. If you just flip a coin and go long or short, it would be difficult to handle mentally.

Ektrader

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coronajazz

Extremely important. Especially the last sentence. How the hell you are going to mentally go through the drawdowns (which will eventually come, no matter what methodology used), if you dont have an "edge confirmed entry", which you know what to expect from over a series of trades. Random entry will not give you the edge because you cant backtest your strategy, thus, you dont know what to expect from trading it.

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trendisyourfriend

Here is an easier system... Follow the last bar. If it went up then go up, down then go down. Open a new contract each time the current bar closes as expected. Close everything when in profit so small it is. Funny how this system works for a long period of time. If you do it, then test it during the time when normal activity of your instrument is at its peak.

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talolard

I'm doing some research now on trading with totally random entries.
The idea is that according to the random walk hypotheis at any point you have a 50/50 chance of the market going in your favour. Thus if you set a trailing and move it with every pip you that goes in your favour then you have a 50 50 chance of winning (not acurate but the concept should be clear).
If the system has significantly more winers than losers (+90%) then you can analyse the distribution of losers and anticipate that the chances for two consecutive losers is very low. So when you have a loser it makes sense to take immense position sizes.
From preliminary research this approach is very viable, but has tremednous potential for drawdowns. so you may see yourself making lots of money in small increments over time with the occasional big, but not too big loss. But then comes aseries of consecutive or close apart losers that wipe you out.
anyway, this is a very interesting way to trade, I think it is suitable to set aside a small amount of risk capital to run at very high risk for very high reward. More details as they come.
tal

trendisyourfriend

Tal, i am sure i have done more research in that area than anyone on this board. Using fuzzy logic to chaos theory, name it. I did many simulators for every concepts that i have been exposed to. Some have been able to maintain a profit for more than 300000 series or meven more. But for me, the best appoach so far has been the discretionary approach where the human mind enters into the equation. For this reason, i have stopped all research into this area which in my mind constitutes a dead end. At some point, you realise you can't go further. You hit a wall so to speak. When you hit that wall, you realise one thing, no single mechanical approach can beat a properly trained brain.

That being said, i agree 100% with Ek. Simplicity with a well advised(oiled) brain is all that you need.

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talolard

What i was talking about up there doesnt necasarilly have to be applied on an automated system. I got the idea from blackjack strategies which are done manually though I may try to implement this in a future automated system if it shows potential.

I think you and I have debated if such a system is possible or not a few times and at this point we can agree to disagree on that topic.
I think that if i do hit that same wall you hit at some point then I will have the whole way I made to show for it i.e. all that I have learnt in the process which is quite a lot, so worst case scenario at this point is that I (and i assume you as well) am in profit for the venture.

Tal

coronajazz

Tal!

I ve read you mentioning several times about the small probability of having so and so losers in a row, and so, advising changing the position size according to the outcome of your last trade. While the probability of two (or more) losers in a row for some systems is really low, once you have a loser, the probability of the next trade being a loser (or a winner), is still 50:50, no matter if the entry is random or not. Isnt that so?

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