Saturday, October 31, 2015

Combine Update- CL going forward.

So despite getting excited about CL's newfound volatility, which started on Tuesday 27th, and impatiently rushing in to try to capitalise on it- hitting 11 losers in-a-row over the next two sessions- I eventually managed to ground myself and finish the 10-Day Combine at an equity high.

CL is definitely where I need to be.

The R:R structure mentioned in the prior post is something that will probably be dependant on the current market environment. As I found out over Tuesday/first half of Wednesday, it can be hard to shift gears...but it can be done. Of course, whether it's actually worth it will depend on how quickly you can adapt to the change and how long the change lasts for. For some, it might be better to stick with one model and see it through those periods where you feel as if you're swimming against the tide (using smaller R:R with higher WR in an expansive, trendy environment or larger R:R with lower WR in a range bound, choppy environment).

I also need to watch out for insisting on a certain scenario... the losing streak mentioned above was caused by two separate occasions where I wouldn't let go of a bias. A combination of trying to show the market that I wouldn't let it leave me behind (I know...not smart) and fear of missing out on the move.

I feel as if I'm ready to try my first C. Combine with CL as my instrument of choice. Something to think about over the weekend.

Sunday, October 25, 2015

Combine Update- Same Method, Same R:R, Different Instrument.

Some time ago, I noticed that a lot of TST traders that went on to be funded had two things in common. 1) The used a $30K and 2) They did it with CL.
Their daily WR was consistently higher than traders using other instruments, with many of them achieving 100% winning days. Those who achieved, say, 80-90% did so with larger winning days as compared to their losing ones.
I had a positive shift in my PnL when moving over to the $30K, I thought it only prudent to check out CL, even if I kept telling myself that I should be able to trade any liquid market in the same way.
Preliminary testing suggests I may be wrong.
In SIM I managed a 60% WR with 1.5/1 RR. You can see from the above that my result with the Combine so far is slightly inferior at 50% WR with 1.38/1 RR.
CL moves differently. It allows me to go with a "set and forget" attitude- no trailing, no management. It hits the target or it hits the stop. When you are on the right side of the market in CL, it rewards you quickly so their is little to no temptation to step in and intervene before stop/target is filled. This leaves me with all my energies devoted to finding the right entries. One of my stronger points...
I under-traded these first 5 days. Fear of committing to/trusting the method enough to keep pulling the trigger is an issue. I needed to be taking 5 trades a day to make it likely that I would hit the profit goal. I'm going to do that this week and see where it takes me.
P.S E is also saved in terms of costs. CL's tick value is twice that of NQ per contract with the same cost per roundtrip. Using a 2:1 GROSS RR and a 50% WR to demonstrate:
NQ- 10 tick wins. 5 tick losses. (10*$5)/-(5*$5)=$50/-$25=$2/-$1. 2:1 RR (gross)
        But commissions=$3.68 so... ((10*$5)-$3.68)/-((5*$5)+$3.68)=$46.32/-$28.68=$1.62/-$1. 1.62:1 RR (Net).
CL- 10 tick wins. 5 tick losses. (10*$10)/-(5*$10)=$100/-$50=$2/-$1. 2:1 RR (gross)
        But commissions=$3.68 so... ((10*$10)-$3.68)/-((5*$10)+$3.68)=$96.32/-$53.68=$1.79/-$1.
1.79:1 RR (Net).
E=(0.5*1.79)-(0.5*1)= 0.395.
You gain 8.5% extra per trade.