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.

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